ORAL ANSWERS TO QUESTIONS

TREASURY

The Chancellor of the Exchequer was asked—

Debt Level (GDP)

Emily Thornberry: What assessment he has made of potential trends in the level of debt as a proportion of gross domestic product to 2014-15.

Linda Riordan: What assessment he has made of potential trends in the level of debt as a proportion of gross domestic product to 2014-15.

George Osborne: This Government inherited plans that had Government debt rising as a share of GDP in 2014-15. Thanks to the credible plan that we have put in place, debt is now forecast to be falling in that year.

Emily Thornberry: Would the Chancellor of the Exchequer like to take this opportunity to explain why the Office for Budget Responsibility now says that the Government will need to borrow £46 billion more than was estimated a few months ago? Would he also like to take this opportunity to accept that, by cutting too far and too fast, we will fall into a vicious circle that will make it more difficult to pay off the deficit in the long term?

George Osborne: The public finance figures are out today, and they show that the British economy and the British Government are on track to reduce the budget deficit, as we forecast in the Budget. On a day like this, in a week like this, for the Opposition to suggest that we should abandon our credible deficit reduction plan shows how out of touch they are with what is going on in the world today.

Linda Riordan: Will the Chancellor confirm that national debt as a proportion of GDP was 36.5% in 2007-08, before the global crisis, which was significantly lower than the 42.5% that we inherited from the previous Government, and lower than in America, France, Germany and Japan?

George Osborne: There is this myth on the Opposition Benches that we inherited a golden economic legacy. It is not a myth believed in by the International Monetary Fund, the OECD or the CBI, nor is it a view shared by Tony Blair or the former Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), both of whom have identified—since the general election, of course—the fact that Labour was running into spending problems in 2007 and that the structural deficit was starting to build before the global economic crisis that the hon. Lady mentioned.

Michael Fallon: How much greater would our public sector debt be if we adopted the completely unfunded and opportunistic proposal for a £13 billion VAT cut from the very people who racked up all the debt in the first place?

George Osborne: My hon. Friend draws attention to the completely ludicrous policy put forward by the shadow Chancellor last week—it was mentioned just on that Thursday, and has not been repeated by any Labour politician since—for a £13 billion unfunded tax change, or £51 billion over the Parliament. The policy is totally incredible, and was rejected by every serious economic commentator on the day. It just shows how far those on the shadow Front Bench have to go to make good for the mistakes that they made in office.

John Redwood: Given the large amount of state bank debt still on the balance sheet, will my right hon. Friend consider a scheme to make an early transfer of shares in the state-owned banks to taxpayers for free, on condition that, as and when people sell, they send money back to the Treasury to represent the Treasury cost of those shares?

George Osborne: I am always happy to discuss the ideas of my right hon. Friend or other Members on how we dispose of those bank shares. The House will know that we announced last week that we are putting Northern Rock up for sale—the good bank in Northern Rock, of course; the state will hold on to the bad bank for many years to come. We want to exit from our shareholdings in RBS and Lloyds in due course, but we do not judge now to be the right time.

Edward Balls: I am very much looking forward to our debate on the economy tomorrow, on the anniversary of the Government’s first Budget. I do hope that the Chancellor is looking forward to the debate too, but today let me ask him about another matter of great importance to our economy, our national debt and our wider national interest. Three months ago the Chancellor told the House that the cost of the intervention in Libya, which the Opposition support, would be
	“in the order of tens of millions of pounds, not hundreds of millions.”—[Official Report, 22 March 2011; Vol. 525, c. 850.]
	That was followed the next day by headlines—which would have been read by the Gaddafi regime—saying that the Chancellor and the Government thought that the campaign would be over in a month. Does the Chancellor now accept that that was a mistake? Will he tell the House how much has been spent so far? Will he
	also give the House his latest estimate of what the full cost of the campaign is likely to be and what its impact on the national debt will be?

George Osborne: rose—

Mr Speaker: Order. All with specific reference to the level of debt as a proportion of GDP.

George Osborne: I see that the shadow Chancellor is following his former master’s habit of straying from the direct area of his brief, but there we go. Let me deal directly with Libya. What I told the House at the time was that the cost estimated at the time by the Ministry of Defence was in the tens of millions of pounds, and the Ministry of Defence is planning to provide an update to the House on the full costs, I think within the next week.

Edward Balls: This is a Treasury matter. It is about Treasury spending from the reserve, and it has a direct bearing on the national debt as well as on our national interests. It seems rather odd that, at the outset of the campaign, the Chancellor was happy to give a detailed answer, yet he now says that he cannot do so. Does he not know, or is he not prepared to do so? Just a few weeks ago, the White House provided the US Congress with a 34-page document giving details of the costs up to 3 June and the likely costs up to September. Will the Chancellor now agree to provide this House with similar information on the cost of Britain’s involvement in Libya, and to make a full Treasury statement to the House?

George Osborne: If the right hon. Gentleman had been listening, he would have heard me say that the Ministry of Defence was going to provide an update on the costs within the next week. I know that, when he was in the Treasury, everything was a Treasury matter, but in this Government we let the Ministry of Defence talk about defence operations, just as we let the Department for Education talk about schools and the Department of Health talk about the NHS. The Ministry of Defence will provide an update on the costs within the next week. The costs come from the special reserve, as the right hon. Gentleman well knows, and I can tell him that they are very much lower than those of the ongoing operations in Afghanistan.

Growth Forecast

Huw Irranca-Davies: What assessment he has made of the likelihood that the growth outturn will meet or exceed the forecast for 2011 made by the Office for Budget Responsibility in June 2010.

Debbie Abrahams: What assessment he has made of the likelihood that the growth outturn will meet or exceed the forecast for 2011 made by the Office for Budget Responsibility in June 2010.

George Osborne: The Office for Budget Responsibility’s latest economic forecasts were published in March. The whole purpose of creating the OBR was to have forecasts that were
	independent of the Chancellor, so for me to give a running forecast would completely undermine the institution. To strengthen its independence, I am today announcing the appointment of Lord Burns and Kate Barker as the new non-executive members of the OBR. They were posts that the Treasury Select Committee recommended that we create. I am also announcing today the new appointment of Michael Cohrs as a non-executive director of the Court of the Bank of England, along with the re-appointment of Sir Roger Carr, Lady Susan Rice and Harrison Young—

Ronnie Campbell: They are all Tory.

George Osborne: Well, the hon. Gentleman will like this bit, then. Recognising that we are all going to have to work a little longer, I am announcing the extension of Brendan Barber’s term by a further year.

Huw Irranca-Davies: A year ago at the Dispatch Box, the Chancellor said that, in his judgment, we would have sustained economic growth, even in the face of the cuts agenda that he is pursuing. Does he now believe that the 1.7% economic growth that the OBR has forecast will be met, or will we face a fourth period of downgrading its growth forecasts?

George Osborne: The OBR is a new institution that I think we all agreed should be established and put on a statutory footing. It is independent, and it makes independent forecasts. If the Chancellor of the day started giving a running commentary on those forecasts or making his own forecasts, that would completely undermine the OBR. The institution was introduced in order to give more credible independent information to Parliament. It is interesting that, in the acceptance speech that the former Foreign Secretary would have given if he had become the Labour leader, one of his central points was that Labour should embrace the OBR as an idea that it should have had while in office and that it should support in opposition.

Debbie Abrahams: Over the past six months, we have seen the economy flatlining, whereas in the previous six months we saw growth of 1.8%. Can the Chancellor explain to the House exactly what has changed?

Chris Ruane: The Government.

George Osborne: I think the hon. Gentleman will find that the Government changed a year ago. I would say to the hon. Lady that the economy is now growing, and that in the past year more than 500,000 private sector jobs net have been created, which the Opposition should welcome. Exports are up 13%, investment is up 5.8% and manufacturing is up 4.2%—[ Interruption. ] Well, we remember when that lot were in a couple of years ago and the economy was tanking. Now it is growing and, as the public finance figures show today, we are getting the budget deficit down, dealing with our borrowing problem and restoring stability to the British economy. That is why the plans that we have put in place have been welcomed by so many independent organisations.

Andrew Tyrie: The Office for Budget Responsibility is scoring the value of most asset sales other than banks at zero in the forecast, on the grounds that it cannot estimate their value. Will the Chancellor provide every assistance possible to the OBR, so that an estimate can be incorporated in its assessment of long-run sustainability, which it is due to publish in three weeks? Is that not an early issue for the newly appointed non-executives to take up?

George Osborne: I am certainly aware that the Treasury Committee and the Office for Budget Responsibility are in discussions over privatisation receipts and other asset sales, but I do not think that it would be right for me to intrude in that discussion. I can give my hon. Friend the commitment that we will certainly provide the OBR with any information it asks for.

Sajid Javid: Has the Chancellor considered what would happen to our growth rate if we followed the advice of the shadow Chancellor, which is opportunistically to oppose every spending cut and every tax increase proposed by the Government?

George Osborne: rose—

Mr Speaker: Order. There is no requirement or need for the Chancellor to comment on Opposition policy. I would have thought that we had grasped that point by now.

Kerry McCarthy: In reaction to this year’s Budget, the Institute for Fiscal Studies said that, if the Chancellor is to meet his borrowing targets, he will be
	“now even more dependent on a bounce back in the rate of economic growth from 2013”.
	Borrowing has already been £1.5 billion higher in the first two months of this financial year than it was in the same period last year, as the Chancellor’s tax rises and spending cuts kick in. If growth outturns fail to meet the forecasts, will the Government change their plans on borrowing?

George Osborne: When the director of the IFS was asked this month:
	“Have things changed so much in the past 12 months that you would expect the Government to change course now?”
	he replied, “No”. In fact, the advice of the IMF is also that now would be the wrong time to adjust macro-economic policies, while the Governor of the Bank of England at Mansion house said that we should not adjust the macro-economic mix. The truth is that the Labour Opposition, who got us into this mess, have absolutely no answers for getting us out of it. Is it not striking that the shadow Chancellor gave a speech last week with his big new economic policy, and not a single Labour MP has mentioned it yet?

UK Economic Policy (IMF)

David Amess: What recent representations he has received from the IMF on UK economic policy.

George Osborne: The IMF completed its article IV assessment of the UK economy this month. Its recommendation could not have been clearer. When asked whether it was time to adjust macro-economic policies, its answer was no.

David Amess: I am delighted that the IMF has confirmed that the Chancellor is pursuing the right strategy to clear up the mess left by the last rotten Labour Government. Will he explain why the yield on UK Government bonds is only 0.25% higher than in Germany, whereas in Portugal it is 8.5% higher?

George Osborne: The simple reason is that we have a credible deficit reduction plan. Even though we inherited a deficit higher than Portugal’s, our interest rates are closer to those of Germany. Indeed, the spread over Bunds—the difference between German and UK interest rates—has come down substantially over the last year, even though that gap has gone up in France, Spain and other European countries. The real monetary stimulus being provided to the economy by those low interest rates is anchored in the credible deficit reduction plan.

Geoffrey Robinson: May I take up the point made by the Chancellor about the outstanding speech made by my right hon. Friend the shadow Chancellor? Why does the Chancellor have this touching, childlike faith in the views of the IMF when it got things dead wrong on the exchange rate mechanism, which it unfortunately imposed on this country the previous time it had the misfortune to have a Tory Government?

George Osborne: It is normal for Finance Ministers to pay some attention to what the IMF says, but there we go. The last time we had a Labour Government, we had to turn to the IMF for help; I am trying to avoid that.

George Freeman: Is my right hon. Friend aware of the recent comments of the director general of the CBI? He said:
	“Acting swiftly and decisively on the deficit has…laid a firm foundation for…growth.”
	Who does my right hon. Friend think is more plausible: the director general of the CBI or the lone voice opposite?

George Osborne: I think the CBI’s view reflects those of almost the entire business community in Britain and almost all international commentators on the United Kingdom economy. When the CBI was asked explicitly what it thought of the Labour party’s plans, its chief economic adviser said:
	“The economy would be weaker because of the impact of a loss of confidence in the markets.”

David Hanson: Since the Government came to power, the growth forecast for this year has been downgraded by 1%. The IMF has also said that the speed of Government cuts poses a risk of higher inflation, lower growth and rising unemployment. Does the Chancellor agree with the IMF, which he is keen to support, that if
	“a prolonged period of weak growth”
	—which we have at present—
	is in prospect, “temporary tax cuts” should be considered?

George Osborne: First, the right hon. Gentleman has misquoted the IMF. Perhaps he will give the House the full quotation. The IMF did not say “at present”, which the right hon. Gentleman slipped into the quotation. [Interruption.] Perhaps he will take the opportunity to correct the record later. Secondly, the IMF said:
	“Strong fiscal consolidation is underway and remains essential”.
	The managing director of the IMF could not have been stronger in his endorsement through article IV.
	I note that three Opposition Front Benchers have asked questions, and that not one has mentioned the new policy of the shadow Chancellor.

Inflation Trends

Angela Smith: What recent assessment he has made of the effect on the economy of trends in the rate of inflation.

David Lammy: What recent assessment he has made of the effect on the economy of trends in the rate of inflation.

David Gauke: The Government consider a range of factors when making their assessment of the United Kingdom economy. The Office for Budget Responsibility is responsible for producing independent economic and fiscal forecasts. The OBR published a full analysis of recent developments and the prospects for growth and inflation in its forecast at the time of the Budget.

Angela Smith: Do the Minister and the rest of the Front-Bench team now regret raising VAT at a time of rising commodity prices, which has helped to push inflation up to double the Government’s target rate and has added to the squeeze on pensioners and families?

David Gauke: First, the former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), said that he would have done the same. Secondly, a cut in VAT would do nothing to reverse the rise in global commodity prices, but would do a lot to reverse the Government’s hard-won credibility for getting the deficit down.

David Lammy: In the light of what the Minister has said, may I invite him to Tesco’s in Tottenham high road, where he will meet some of my constituents who must deal with higher food prices, rising electricity and gas prices and, now, redundancy and the loss of most of the services on which they rely?

David Gauke: I should be delighted to accept the right hon. Gentleman’s invitation. However, he will be aware that VAT is not chargeable on food, and that we have not raised fuel duty as the last Government did. You do not have to be a mastermind to know that.

Elizabeth Truss: If the Government took longer to reduce the deficit and carried on spending, what would be the impact of that policy on inflation?

David Gauke: I certainly think that, if we put our credibility at risk, there would be considerable concern about, for example, the currency. The response to that would be higher interest rates, which would do nothing for the growth of the economy.

Nadhim Zahawi: We are already spending £120 million a day on debt interest. What figure does the Minister think would be reached if we had not increased VAT?

Mr Speaker: Order. We should be focusing on inflation. I call the Minister to answer, very briefly.

David Gauke: I shall try to focus on inflation, Mr Speaker, but I think that it is important to the economy all round, in terms of inflation and of other factors, for us to maintain credibility. That is something that the Government have and the Opposition, I am afraid, do not.

Angela Eagle: How many of the 34 countries in the OECD have comparable inflation rates higher than the present rate in the United Kingdom?

David Gauke: The fact that global commodity prices are rising and that the UK experienced a significant devaluation under the last Government mean that we face an issue with inflation, but it is the Monetary Policy Committee of the Bank of England that has responsibility for that. It is one of the few policies of the last Government that still has any credibility. Is the Labour party distancing itself from that policy as well?

Angela Eagle: Obviously, the Minister did not know that the answer is only two: Estonia and Turkey. He can huff and puff and blame world commodity prices all he wants, but is it not obvious that the Chancellor’s decision to put up VAT in January because he chose to cut too far too fast is causing real hardship to families throughout the country as they struggle to cope with the most vicious squeeze on living standards in generations? When is he going to realise that his economic policy is hurting and it is not working, and that the whole Treasury Front-Bench team is out of its depth?

David Gauke: For a moment, the hon. Lady got quite close to supporting the policy the shadow Chancellor announced last week, but she did not quite do so. The fact is that the Bank of England says the main causes of inflation are to do with the devaluation and rising global commodity prices. That is the truth; that is the reality—[Interruption.] Well, that is what the Bank of England says, and I suspect it has a bit more expertise than the hon. Lady.

Structural Deficit

John Stevenson: What recent estimate he has made of the size of the structural deficit.

Danny Alexander: The independent Office for Budget Responsibility published its latest forecast on the structural deficit in the March
	economic and fiscal outlook. The OBR forecast shows the structural deficit was 7.4% of GDP in 2010-11.

John Stevenson: I thank the Minister for that answer. Does he agree that one of the main reasons we are experiencing financial difficulties and the large budget deficit is the simply that for a number of years prior to the recession the Labour Government were borrowing money while other, prudent economies were repaying debt, and that has exacerbated our problems now?

Danny Alexander: I am grateful to my hon. Friend for that question, and he makes an important point. This country was running a structural deficit from 2002 onwards, so his analysis is exactly right. However, that was not the only problem with the previous Government’s policy, of course; another was their abject failure to regulate the banks and deal with the financial system. That is a further major cause of the problems we face.

Geraint Davies: Does the Chief Secretary accept that his and his Government’s macho approach of massive cuts and confronting the unions is reducing consumer confidence, which in turn is reducing investment, and that that is hindering growth and has led to the March deficit forecast being increased by £46 billion, which is almost £1,000 per person in Britain?

Danny Alexander: No, I do not. The decisions we have taken on reducing the enormous budget deficit we inherited from Labour were absolutely necessary to restore confidence in this country’s ability to pay its way in the world, and that is helping to deliver the low interest rates that are delivering a significant benefit to our economy. The hon. Gentleman should recognise that, too.

Andrew Selous: Will the Chief Secretary reassure the House that he will never behave as irresponsibly as The Daily Telegraph has revealed the last Government did? When faced with a massive structural deficit before the recession, they increased spending by £90 billion between 2007 and 2010, even though the Treasury told them to increase spending only in line with inflation.

Danny Alexander: I can certainly confirm that we will not repeat that mistake. We have all seen the document entitled, “We’ve spent all this money, but what have we got for it?” It is very important that this country maintains the spending plans we set out in the spending review, in order to deliver the deficit reduction that this country needs to establish confidence in our economy.

Bank Lending (Small Businesses)

Chris Evans: What assessment he has made of trends in bank lending to small businesses in the first quarter of 2011.

Mark Hoban: Under Project Merlin, the banks loaned a total of £47.3 billion to UK businesses in the first quarter of 2011, including £16.8 billion to small and medium-sized enterprises. The Government are encouraged that banks are broadly on target to meet their overall commitments.
	However, it is disappointing that banks are behind schedule on SME loans, and they clearly need to do much more work to deliver on their commitments.

Chris Evans: A number of small businesses in Islwyn tell me they have experienced an increase in the overall interest rate charged by banks, despite the base rate being at an all-time low. What are the Government doing to address that?

Mark Hoban: We must ensure that banks signal to businesses that they are open for business and that they have the capacity to lend to businesses. That is why we work with the banks to deliver Project Merlin, but, as I have said, there is more work for the banks to do to ensure they lend to small businesses, and we will continue to hold them to account on that.

Laura Sandys: Did Project Merlin also cover transparency in respect of the covenants banks require small businesses to put forward, and has that increased over the last three or four years? I ask because this seems to be one of the big barriers to small businesses taking out loans.

Mark Hoban: My hon. Friend makes an important point about the relationship between banks and their customers and the transparency of that relationship. That is why the British Bankers Association business taskforce has introduced a range of measures to look at the relationship between banks and their customers and we will continue to monitor that work. It is important that banks are transparent with their customers about the terms on which loans are offered.

Anne Begg: My constituent Ashlea Hassan came to see me last week with her idea for setting up a small business. Despite having been told by every bank she has visited that she has an excellent business plan, a brilliant concept and enough equity in her house, not one of them is prepared to lend her the £40,000 she needs to set up her business. What advice does the Minister have for my constituent?

Mark Hoban: I would encourage the hon. Lady to suggest to her constituent that she pursue the appeal route that each bank has to enable businesses to appeal against lending decisions. That is a very transparent process that would, one hopes, reach the outcome that her constituent wants. The hon. Lady could also encourage her constituent to approach business angels for investment. We announced in the Budget a review of venture capital trusts and enterprise investment scheme reliefs to encourage more investors to commit more money to small and medium-sized enterprises.

Charity Bequests

Tony Baldry: What fiscal measures he is taking to encourage bequests to charities.

Justine Greening: At the Budget this year we announced the most radical and generous series of charity tax reforms for more than 20 years. The measures were not just
	about improving support for gift aid and payroll giving—we also introduced new measures to improve the inheritance tax system so that we can encourage more bequests.

Tony Baldry: What estimate has my hon. Friend made of the number of charities that will benefit from the raising of the gift aid limits, the simplification of gift aid administration and the introduction of the gift aid small donation scheme?

Justine Greening: My hon. Friend is right to point out that we have taken a number of steps to improve the ability of gift aid to help charities. There are about 100,000 charities and community and amateur sports clubs currently registered for gift aid, all of which should be able to benefit in part or in entirety from these changes.

Ian Lucas: The reality of the Government’s approach to charities is that they have imposed a tax burden on charities by increasing VAT. If the Minister really wants to do something positive for charities, why does she not extend to them the same tax relief relating to VAT that is extended to local government?

Justine Greening: I emphasise to the hon. Gentleman that the measures we came up with for the Budget were ones that we talked to charities about in order to pull together. Over this Parliament, the measures will encourage approximately £600 million more going to charities from donations, and I think that all hon. Members across the House should welcome that.

Banks (Taxation)

Paul Blomfield: What assessment he has made of the level of taxation of banks.

Mark Hoban: Banks operating in the UK make a significant contribution to the economy and public finances. However, as the financial crisis demonstrated, the sector also posed a potential risk to the wider economy and it is only fair for the banks to make an additional contribution to reflect that. That is why we have implemented a permanent levy on the balance sheet of banks, which will raise more than £2.5 billion each year.

Paul Blomfield: I thank the Minister for that reply, but will he recognise the enormous feeling throughout the country that the banks need to fulfil their responsibility for the challenges we face? Will he therefore explain the stubborn refusal of the Government to repeat last year’s bonus tax, on top of the bank levy, which would generate the revenue to build 25,000 affordable homes and create 100,000 new jobs?

Mark Hoban: Perhaps the hon. Gentleman should speak to the right hon. Member for Edinburgh South West (Mr Darling), who said that imposing the bank levy again simply would not work.

Peter Bone: Are the losses on banks that accumulated because of their bad judgment
	being allowed to be set against future profits? In other words, are they avoiding future tax on future profits?

Mark Hoban: The corporation tax arrangements for banks are similar to those for other businesses. That is one reason why we have imposed the additional bank levy, which will raise more each year over this Parliament than the previous Government’s bank payroll tax did. It is important that the banks make a contribution to reflect the risk that they pose to the wider economy.

Unemployment Trends

Bill Esterson: What recent assessment he has made of the effect on the economy of trends in the rate of unemployment.

Steve Rotheram: What recent assessment he has made of the effect on the economy of trends in the rate of unemployment.

Danny Alexander: The unemployment rate has fallen recently: in the latest data, it was 7.7%—down from 7.9% on the quarter. The Office for Budget Responsibility assumed at Budget 2011 that the structural rate of unemployment was unchanged from its previous trends at 5.25%. In the medium term, unemployment is expected to fall as the economy recovers, supported by the action taken by the Government, including measures published in the Budget and “The Plan for Growth.”

Bill Esterson: Youth unemployment peaked in 1985 four years after the recession of 1981, with disastrous consequences for a generation of young people. When the Chancellor scrapped the future jobs fund he showed that he had not learned from what happened in the 1980s. Is not the truth that the Chancellor is out of touch with the realities of life for young people and is on course to repeat the same mistakes as the Tories made in the 1980s, with the same disastrous consequences?

Danny Alexander: If the hon. Gentleman was being fair, he would recognise that youth unemployment was growing substantially under the previous Government as well. The country has faced the problem for many years, which is why in the Budget we announced a £200 million package of support, including work experience placements for young people, skills training, guaranteed interviews and progression to apprenticeships. Including the measures in the Budget and the spending review, we will deliver at least 250,000 more apprenticeships over the next four years, compared with the previous Government’s plans.

Steve Rotheram: Since this nightmare coalition came to power, the number of people out of work in my constituency has increased, and that is even before the cuts really start to bite. Is it not a fact that the Chancellor, like many Members on the Government Benches, still believes that unemployment is a price worth paying?

Danny Alexander: Certainly not. That is why in Merseyside, we have announced a new enterprise zone that will encompass the Liverpool Waters and Mersey
	Waters regeneration projects. The regional growth fund has announced several projects in Merseyside, and the Work programme in Merseyside will help to deliver support for people to get off benefits and into work; the second contractor got under way yesterday. I hope the hon. Gentleman agrees that is a serious programme to help people off benefit and into work in Merseyside.

Charlie Elphicke: Will the Minister confirm that the recent announcement of the sharpest fall in unemployment in a decade and the creation of 500,000 jobs in the private sector over the past year shows hope that things are going in the right direction for unemployment?

Danny Alexander: We always said that the economic recovery would be choppy, but it is none the less welcome that we have seen significant job creation in the private sector over the past year. That offsets some of the job reductions in the public sector that are necessary as part of our deficit reduction programme.

Rob Wilson: May I tell my right hon. Friend that since May last year unemployment in my constituency has fallen by 11%? That is due to fast-growing private companies, such as Pegasystems. Is not the key to reducing high unemployment sticking to the deficit reduction programme and removing barriers to growth?

Danny Alexander: My hon. Friend is absolutely right. We have to stick to the deficit reduction programme, which is the essential underpinning for future economic growth in this country. We also need to take steps to ensure that that economic growth is balanced across the country, and the regional growth fund and the local enterprise partnership programme are an important part of ensuring that we have growth across the entire United Kingdom.

Job Creation (Private Sector)

Eric Ollerenshaw: What recent assessment he has made of the rate of job creation in the private sector.

Mark Hoban: Last week, the Office for National Statistics published private sector employment numbers for the first quarter of 2011. They showed that private sector employment has risen for five consecutive quarters by 560,000 in total. That is the largest increase recorded over five consecutive quarters since the ONS started to publish the quarterly series of private sector employment in 1999.

Eric Ollerenshaw: I welcome those figures, but—like other Members—I constantly meet in Lancaster and Fleetwood small and medium-sized enterprises that have orders and could take on new staff and deal with the unemployment situation, but are being frustrated by the banks. What further support can the Minister offer to those much-needed engines of private sector growth?

Mark Hoban: That is why we introduced Project Merlin. We have also taken other measures to encourage funding for small businesses. The banks have set up the business
	growth fund, which can invest capital in medium-sized businesses to help them grow. We have approved arrangements for business angels to invest more in small and medium-sized businesses. These are the measures we need to take to introduce a range of available finance so that small businesses and private sector employment can continue to grow.

Brian H Donohoe: When a constituent comes to my constituency surgery or writes to me, and I write to the Treasury because that is where their question should be answered, why, after a long process, is the Treasury now saying that I will not get a letter in reply because a circular was sent some months ago? The Minister now answering is the one who is responsible. Why is that practice happening in the Treasury?

Mark Hoban: rose—

Mr Speaker: Order. The hon. Gentleman refers to letters but the question is about the rate of job creation in the private sector; I think the hon. Gentleman meant to say that.

Mark Hoban: Indeed. If the hon. Gentleman will let me have details, I will look into the matter for him.

Brian H Donohoe: On a point of order, Mr Speaker. In view of the unsatisfactory nature of the reply I have just received, I will seek a debate on the Adjournment.

Mr Speaker: I am extremely grateful. Under the procedures of the House, as colleagues are aware, we must proceed to the next question.

Budget (June 2010)

Andrew Gwynne: What assessment he has made of the progressive effects of the measures in the June 2010 Budget which have been implemented to date.

Justine Greening: As the House knows, the Government published huge amounts of analysis of the impact of the measures announced in the Budget of June 2010. The majority of the measures have now been implemented. The charts in the Budget book show that the most well-off households make the largest contribution to the fiscal consolidation, both in cash terms and as a proportion of their net income.

Andrew Gwynne: I am grateful to the Minister for that reply, but has she seen the analysis produced by the House of Commons Library and my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper) showing that the measures in the last Budget hit women three times as hard as they hit men? Why is that?

Justine Greening: I do not accept the premise of the hon. Gentleman’s question at all. As ever, what we have heard from the Opposition is a cheap political point-scoring jibe. They might be better advised to come up with an alternative plan for tackling the fiscal deficit. The hon. Gentleman had nothing to say to my response to him,
	which implied that it is the most well-off households in the country that are bearing the brunt of the fiscal consolidation.

Jonathan Reynolds: A year ago, when the Institute for Fiscal Studies analysis found that the Budget was a regressive one, the Treasury objected to that analysis on the basis that the IFS had not properly considered the incentives to economic growth that the Budget contained, but given that growth is now flatlining and seems to be frequently downgraded, is the Treasury willing to accept that the IFS analysis last year was entirely correct?

Justine Greening: The IFS analysis was very clear-cut that it was indeed the most well-off people in our country who were bearing the brunt of the fiscal consolidation measures. I draw the House’s attention to the need to look at the overall impact of not just the Budget 2010, but the spending review and the Budget this year. They show that the most well-off people in our country are bearing the brunt of the fiscal consolidation, whether that is measured in terms of their income or of their expenditure.

Philip Hollobone: The incentives for job creation in the June 2010 and subsequent Budgets are to be welcomed, but given that for every 10 new jobs eight go to foreign-born workers, what more can be done to encourage the employment of the indigenous work force?

Justine Greening: As my hon. Friend knows, one of the key aspects of the Budget this year was to launch “The Plan for Growth”. A key part of that was to provide for more apprenticeships and more work experience so that we can make sure that people have the right skills that companies in this country need.

Growth Forecast

Alison McGovern: What assessment he has made of the most recent growth forecast by the Office for Budget Responsibility.

Danny Alexander: Growth forecasts are for the independent Office for Budget Responsibility. In March it forecast the economy to grow by 1.7% in 2011, 2.5% in 2012 and 2.9% in 2013.

Alison McGovern: If the OBR embarrasses the Treasury again by downgrading growth forecasts yet again, how will the Government respond?

Danny Alexander: As I say, growth forecasts are a matter for the independent Office for Budget Responsibility. I am clear that the deficit reduction programme is essential to ensure that we have confidence in the UK economy. Given that the Opposition caused the mess we are trying to clear up, I hoped the hon. Lady would support that.

Stephen Hammond: Does the Chief Secretary agree that one of the assessments that we can make on growth is that encouraging job creation in the private sector will see a reversal of the decline in
	the productivity experienced when the Labour party was in power, and is likely to see growth forecasts continue to rise?

Danny Alexander: The hon. Gentleman is right that we need to see the private sector lead the economic recovery. Many of the measures that we announced in “The Plan for Growth”, such as reforms to the planning system, the measures on regulation and some of the tax measures that we announced to support investment, will all help to encourage and support private sector businesses to lead the recovery that we all want to see.

Banks (Regulation)

Glyn Davies: What steps he is taking to reform the regulation of banks and financial institutions.

Mark Hoban: Last Thursday we published “A new approach to financial regulation: the blueprint for reform”, which sets out the Government’s proposals to reform financial regulation in the UK.

Glyn Davies: With a permanent annual levy worth £2.5 billion, tough rules on bonuses, a new deal on lending and regulatory responsibility returned to the Bank of England and handed to a new Financial Conduct Authority, is not the coalition making good progress in creating a sustainable banking system?

Mark Hoban: My hon. Friend is absolutely right that we have made significant progress over the past year in getting the financial regulatory system back in good shape. Of course, the Opposition should remember that it was the shadow Chancellor who spent his time in office trumpeting the value of light-touch regulation across the world.

Mark Durkan: Will the Minister assure us that, in the context of his current work on regulation, the anomalous position of credit unions in Northern Ireland, which have much bigger memberships and funds than those in the rest of the UK but cannot offer the same range of services, will be addressed, along with industrial and provident societies in Northern Ireland, which are also in something of a regulatory black hole?

Mark Hoban: The hon. Gentleman makes an important point. Work is under way to look at the regulatory position of Northern Ireland credit unions.

Topical Questions

Gareth Thomas: If he will make a statement on his departmental responsibilities.

George Osborne: As set out before, the core purpose of the Treasury is to ensure the stability of the economy, promote growth and jobs, reform banking and clear up the mess in the public finances that we inherited.

Gareth Thomas: In Harrow, five police sergeant posts have been axed and Wealdstone police station is being closed. Is that the Chancellor’s fault for cutting public services too far and too fast, or should I blame Boris?

George Osborne: I blame the Labour Government. During the election campaign, the Labour Home Secretary said publicly on television that police numbers would have to be cut if Labour was re-elected.

Stephen Barclay: What assessment has my right hon. Friend made of the cost to the public finances of an emergency cut in VAT and the disastrous impact that would have on debt interest?

George Osborne: The estimate is £51 billion over this Parliament, which I guess is just another nail in the coffin of the shadow Chancellor’s economic credibility.

Denis MacShane: Has the Chancellor by chance seen the interesting analysis by the House of Commons Library showing that the measures in his Budget will affect women three times as adversely as they will affect men? Is he a misogynist?

Justine Greening: rose— [ Interruption. ]

Mr Speaker: Order. Mr Ruane, I want to hear the Minister’s answer.

Justine Greening: The right hon. Gentleman’s hearing must be suffering, because he obviously did not hear my earlier answer to the hon. Member for Denton and Reddish (Andrew Gwynne).

Aidan Burley: Dr Adrian Steele, the managing director of Mercian Labels in Cannock, has just been named as one of the midlands’ most promising entrepreneurs. His company supplies labels and barcodes to the medical industry and employs 32 people. Does the Chancellor agree that it is small business entrepreneurs such as Dr Steele who will grow our economy back to strength, and will he continue to support manufacturers, who were shamefully neglected by the Labour party?

George Osborne: My hon. Friend is right. Manufacturing halved as a share of our economy under the Labour Government and financial services grew dramatically over that period. Since the last election, manufacturing output is up 4.2% and the private sector has created more than 500,000 new jobs net, which is all good news. The example he brings to the Chamber is just one of many companies that are investing and employing people, and despite a choppy recovery we should celebrate that.

Alison McGovern: On 14 February the Governor of the Bank of England told the Chancellor that his VAT rise had caused inflation. On 16 May the Governor again told him that his VAT rise had caused inflation. Will he tell me how he is measuring the impact of his VAT rise on the rest of our economy and whether it was a rise too far, too fast?

George Osborne: The Governor of the Bank of England had his opportunity at the Mansion House to comment on the macro-economic policies pursued by the Government, and he said that
	“to change the broad policy mix would make little sense.”
	That is the judgment of the Governor of the Bank of England, and the hon. Lady may now find herself, like the shadow Chancellor, against the IMF, against the IFS, against the Governor of the Bank of England and against the CBI. It leaves the right hon. Gentleman completely alone, and it leaves the Labour party’s economic policy absolutely isolated in the world. Now, she is a new Member, and I know that she has been saddled with being the former Prime Minister’s private secretary, but she can break away from the nonsense being spouted by Opposition Members.

Oliver Colvile: Does my right hon. Friend agree that the shortest suicide note in history consists of just five letters—plan B?

George Osborne: My hon. Friend is right, and, in the case of the Opposition, their plan is plan B for bankruptcy.

Russell Brown: About 20,000 UK citizens, including some of my constituents, have lost their savings by investing in the fund management company, Arch Cru. Will the Chancellor step in and investigate the role of the Financial Services Authority in the failure of that company?

Mark Hoban: The hon. Gentleman may well be aware that today an announcement was made of a voluntary scheme that we have put together to make available £54 million of compensation to Arch Cru investors. That, together with a previous payment to consumers, means that they will have recovered about 70% of the value of their holdings in Arch Cru funds as of the date when the funds’ trading was suspended. That is a welcome move for Arch Cru investors, the FSA is continuing to look at the matter, and it would be inappropriate to make any further comment on it.

Andrew Jones: Has the Chancellor had cause to regret a decision, made by one of his predecessors, to sell the UK gold reserves a decade ago at the bottom of the market, a decision that has cost this country just under £10 billion?

George Osborne: My hon. Friend is right: it is a decision of great regret. The gold was sold at £2.3 billion, and it would now be worth £12 billion, which as he says is a £10 billion loss. The Labour party, on the advice of the shadow Chancellor, managed to sell gold at its record low price. Indeed, gold traders now call it the Brown bottom. That is how they know the number, and it is yet another disastrous decision after which we are having to clean up.

Caroline Lucas: The Chancellor will be aware of the recent Office for National Statistics finding that the regressive nature of VAT means that the UK tax system is doing almost nothing
	to prevent income inequality. In that context, will he pay particular attention to a Fawcett Society report, to be launched tomorrow, which shows that his fiscal policies, such as increasing VAT, cause particular harm to lone parents, 92% of whom are women?

David Gauke: May I also point out that our tax policies include taking hundreds of thousands of people out of income tax altogether? On the particular subject that the hon. Lady raises, of those taken out of income tax following the announcement in the Budget earlier this year, 56% will be women.

Robin Walker: Which does the Chancellor think is better for low-paid workers in Worcester: the Government taking 1 million of the lowest paid out of tax altogether; or the previous Government’s move to double their tax by scrapping the 10p tax rate?

George Osborne: As my hon. Friend points out, we have taken more than 1 million low-paid people out of income tax. We are committed to further such moves through this Parliament, and that is in stark contrast to the 10p tax raid in the previous Parliament. Of course, we now discover that, before the decision was made, the shadow Chancellor knew all about its impact on the poorest fifth in our society.

George Mudie: The Chancellor thought it proper in his Mansion House speech to give the bankers of the City first go on his views about the ring-fencing of banks. Apart from that being discourteous to the banking commission, which he set up, does he not think it discourteous to this House that he is prepared to give bankers that information but not to come and explain it to the House and take questions?

George Osborne: First, the announcement was made with the consent of the Independent Commission on Banking. Secondly, it is established that the Chancellor is able to give the Mansion House speech each year. I seem to remember that the last-but-one Chancellor announced the renewal of the nuclear deterrent at the Mansion House without coming to the House of Commons to do so. If the hon. Gentleman will allow me to say something about banking reform at the Mansion House in the years to come, I will therefore be grateful.

Stephen Williams: The spending review said that employee contributions to public sector pensions would need to increase in order to make the funds sustainable for the future. Does my right hon. Friend agree that that rate should not be applied uniformly in order to protect the lowest-paid public sector workers and encourage them to stay within public sector pension schemes?

Danny Alexander: I am grateful for the question. I agree with my hon. Friend. In fact, a similar point has been made by several trade union representatives in the very constructive talks that we are having at the moment, which will be
	going on over the next few weeks. In applying the increase in pension contributions, it is very important to protect the low-paid so as to minimise the risk of opt-out.

Alison Seabeck: Repossessions are rising and are up by 17% on the last quarter. That is very reminiscent, sadly, of the conditions under the Conservative Government in the 1990s and the cost and misery caused to families. Will the Chancellor, and perhaps the housing Minister, tell us what direct action he is going to take to support those affected and to restore confidence to the housing market?

Mark Hoban: The hon. Lady is right to highlight the increased number of repossessions. We want to see a strong and stable housing market. The Government have taken action to support those who wish to stay in their homes through an extension of the scheme for mortgage interest support. We are continuing to make sure that advice is available to people who are facing difficulties in meeting their mortgage payments. The important thing, however, is to keep interest rates as low as possible for as long as possible so that families are not faced with an increase in their mortgage payments.

John Redwood: Given the lack of growth in money and credit, is there anything else that the Government can do to promote the growth in the economy that is so crucial to their plans?

George Osborne: As my right hon. Friend will know, the supply-side reforms that were set out in the growth review, including the reduction in corporate tax rates, are key. At the same time, as banks’ balance sheets inevitably contract after the credit crunch and after the dramatic increase in the size of balance sheets over recent years, we need to ensure that we try to protect small and medium-sized businesses from the effects of that. That is why we concluded the Merlin deal with the banks.

Jonathan Ashworth: The Minister will be aware that the claimant count has continued to rise in the past three months and that unemployment in many inner-city constituencies such as mine remains stubbornly high. Why will he not consider taxing the banks sufficiently to fund an inner-city youth jobs programme to help the young people on the estates in my constituency?

George Osborne: We have introduced a permanent bank levy that applies each and every year. There was a bank bonus tax for one year of the 13 years of the Labour Government; other than that, there were no charges on the banks. The former Chancellor of the Exchequer—my immediate predecessor—said that we could not repeat that because the bankers would find a way round it. We therefore looked to the advice of international bodies such as the IMF, and we introduced a bank levy that will raise more each and every year, net, than the Labour Government raised from the banks in any one year. That shows that we are asking the banks to make a decent contribution to the economy.

Henry Smith: Last week, a consortium of regional airports called for a congestion tax on London airports such as Gatwick in my constituency. Will the Treasury rule out such an absurd and, frankly, anti-free trade measure?

Justine Greening: My hon. Friend is right to refer to the importance of the aviation sector. As he will know, the consultation on reform of air passenger duty closed last Friday, and we have received a number of different representations from stakeholders. He will be aware that this is partly about looking at what we can do to support regional airports, but we certainly do not want to do that at the expense of our other key airports in the south-east.

Chuka Umunna: Several figures have been cited about the number of jobs created over the past 12 months. What percentage of those jobs were created before the spending review and are arguably attributable to the last Government, and what percentage have been created since?

George Osborne: I am happy to provide the hon. Gentleman with an exact breakdown based around the date of the spending review. What is clear, however, is that we said that we wanted the private sector to lead the recovery and that that was absolutely essential. That is the view of virtually every credible economist and business organisation in the country. He should be celebrating the fact that over 500,000 net new jobs have been created by the private sector in the past year.

Duncan Hames: Last week, I met development campaigners from Bradford-on-Avon at the “Tea time for change” rally. They welcome the Chancellor’s support for transparency in companies operating in developing countries. Will he press for effective legislation internationally, and for country-by-country, project-by-project financial reporting for companies in the resource extractive industries?

George Osborne: My hon. Friend raises a good point, which commands the support of MPs from all parts of the House. We want to see greater transparency in the extractive industries. I raised the matter at the G20 meeting in Paris earlier this year. We want measures to be introduced at a European level and shortly after that at a G20 level to ensure that they have the maximum possible impact around the world.

Jonathan Edwards: Diolch yn fawr, Mr Speaker. The Governments of Northern Ireland and Scotland will soon have greater financial autonomy. What requests has the Chancellor received from the new Welsh Assembly Government for similar job-creating levers?

George Osborne: The hon. Gentleman knows that we made a clear commitment that if the outcome of the referendum in Wales was a yes, we would set up a Calman-like process that would come to an agreed set of proposals—I hope they will be agreed across many parties, as was the case with Calman in Scotland—on greater financial responsibility for the Welsh Assembly. We are engaging in that process now. One reason why Calman has worked well—I know that we will come on to discuss the Scotland Bill later—is that at least three parties in the House of Commons, Labour, the Liberal Democrats and the Conservatives, were able to agree on a set of proposals. I hope that we can achieve similar agreement in Wales.

Stephen Metcalfe: I am sure my right hon. Friend is aware that if every small and medium-sized enterprise in the UK employed one additional person, we would have an employment surplus. What plans does he have directly to incentivise SMEs to take on additional staff?

George Osborne: First, we offer a national insurance tax break for new employees in new companies. We have cut the small companies tax rate, which was due to go up when I came to office. We are also cutting the headline rate of corporation tax by 2% this year and then by a further 3%, making it a 5% reduction over the course of the Parliament.

Ian Austin: Is the Chancellor who now complains about a decade of over-investment by the previous Government related to the George Osborne who wrote an article in The Times in 2008 not just praising that Government’s spending plans, but promising to stick to them?

George Osborne: I think the hon. Gentleman has his years wrong, for a start. We fought the 2005 general election warning that Labour was spending too much and we fought the 2010 general election giving that warning. The British people listened to us, and realised that people like him had been supporting a Government who had brought our country to the brink of bankruptcy.

Sentencing Reform/Legal Aid

Kenneth Clarke: With permission, Mr Speaker, and further to the written ministerial statement I laid in the House earlier today, I would like to make a statement.
	Last autumn, the Government launched two consultations on far-reaching plans to reform punishment, rehabilitation and sentencing of offenders, and on legal aid in England and Wales. Today I have laid before Parliament the government’s responses to those consultations. I will also introduce the Legal Aid, Sentencing and Punishment of Offenders Bill to give effect to the measures we are taking forward that require primary legislation.
	Protecting the public from crime and punishing lawbreakers are the most fundamental responsibilities of the state towards its citizens. The sad truth is that after 13 years of government, over 20 criminal justice Bills, more than 3,000 new criminal offences and an explosion in the prison population, Labour left the system in crisis. Most of our prisoners spend their time behind bars idling in their cells, with ready access to drugs. A bigger scandal still is our reoffending rates, which are straightforwardly dreadful. Within a year of leaving jail, half of offenders will have been reconvicted of further offences. The same people cycle round the system endlessly, committing more crimes against more victims. The best way to reduce crime is to reduce reoffending, and that remains the central feature of our programme of radical reforms.
	Prisons must be places of both punishment and reform. Today I can confirm that we plan to deliver a full working week across the prison estate. We will legislate to extend powers to use money earned by prisoners to support victims. We have never proposed that community sentences should replace prison sentences, but we will introduce tougher, properly enforced community punishments whereby offenders work longer hours, unpaid, at least four days a week.
	Drug abuse lies behind much, if not most, criminality in this country. It is not acceptable that drugs are too readily available in prison. We are taking forward plans to reduce addiction across the prison estate by improving security and introducing drug-free wings in jails. We must tackle other root causes of criminality, particularly alcohol addiction, mental illness and a lack of skills, but we will ensure that we put taxpayers’ money only into rehabilitation programmes that actually work.
	Public confidence in the criminal justice system is unacceptably low. That is why we want to take forward plans for a new offence, with a mandatory minimum prison sentence of six months, for adults who use a knife to threaten and endanger. We will also consult on proposals to criminalise squatting, and we will bring forward legislation to clarify the law on self-defence. In addition, I can confirm our intention to improve the use of remand and reduce the number of foreign national prisoners in our jails.
	Discounts for early guilty pleas have been part of the criminal justice system for decades, for good reason, and we consulted on changes to that system. Personally, I was particularly impressed by the representations of the senior judiciary and other criminal justice experts
	who said that increasing the maximum discount on offer for a guilty plea at the earliest possible stage might result in the sentence served being too short in some serious cases. I was hoping to address that problem, and I considered doing so by introducing a greater degree of judicial discretion, but we could not make that work. We have therefore decided to retain the present system.
	The consultation also produced strong opposition to the indeterminate sentencing framework. It was introduced by the last Government and sold as a way of protecting the public from a small number of the most dangerous offenders, but it has never worked as Parliament intended. It has created a flawed system in which thousands of offenders have already served their normal sentence or tariff, but no one can predict when or if they might ever be released. That is why, as the Prime Minister confirmed this morning, we are reviewing so-called indeterminate sentences of imprisonment for public protection, with a view to replacing them with a more sensible, tough system of long, determinate sentences. That will see judges handing down life sentences in a greater number of very serious cases, including mandatory life sentences for the most serious repeat offenders. Serious sexual and violent offenders will spend at least two thirds of their sentence in prison, rather than being released halfway through. We intend to return to the best aspects of the system before IPPs were introduced in 2005 by new Labour.
	I turn to legal aid reform. We have much the most expensive system in the world, except for Northern Ireland, costing £39 per head of population. That compares with, for example, £8 per head in New Zealand, a country with a broadly similar legal system. The last Government consulted on the subject more than 30 times since 2006, and still left us with the mess that we now have to tackle. In some cases the system encourages people to bring issues before the courts when other solutions might be better. In others it enables people to pursue litigation that they would not contemplate were they paying for it out of their own pocket.
	Following careful consideration of more than 5,000 responses, I am bringing forward proposals that I believe will ensure access to public funding in the cases that most require it, encourage early resolution of disputes instead of unnecessary conflict and ensure much better value for money for the taxpayer.
	I can announce that we will retain legal aid in cases where people’s life or liberty is at stake, where they are at risk of serious physical harm or immediate loss of their home, or where their children may be taken into care. In response to consultation, that will include strengthened provision for victims of domestic violence and for children at risk of abuse or abduction, and the retention of legal aid for special educational needs cases.
	Legal aid will no longer be routinely available for most private family law cases, clinical negligence, employment, immigration, some debt and housing issues, some education cases, and welfare benefits. It will also no longer be available for squatters resisting eviction.
	We have also decided not to abolish, as we originally proposed, the current capital disregards for pensioners and for equity in the main home in assessing an applicant’s eligibility for legal aid. We will not now introduce a £100 contribution from capital for those assessed as having £1,000 or more disposable capital.
	All that amounts to a balanced and sensible package of reforms of the kind that the Government were determined to achieve when we published our proposals and started to consult on them. Our plans mean a return to common sense in the justice system. On legal aid, the overall effect will be to achieve significant savings while protecting fundamental rights of access to justice. On sentencing, we will deliver punishment, protection and a renewed focus on breaking the cycle of crime and reoffending. I look forward to debating the proposals on Second Reading and during the Bill’s subsequent stages.

Sadiq Khan: I thank the Justice Secretary for advance sight of his statement.
	Our justice policy should be about protecting the public, punishing and reforming offenders, being on the side of the victim and bringing crime down. That underpinned our record in government, which led to a 43% fall in crime, reductions in reoffending and serious improvements in youth offending rates. However, the Government demonstrate that that is not what matters in their approach to crime and justice. Instead, it is about cutting cost, despite the impact it could have on communities across the country.
	The Government have seen sense and taken heed of opposition to cost-driven proposals to reduce sentences by 50% on early guilty pleas. A coalition of victims, the judiciary, justice groups, the Sentencing Council and victims groups rightly questioned the motivation and effectiveness of that policy. Let us be clear: the policy had been agreed by the Cabinet. I asked the Justice Secretary during the Opposition day debate on sentencing whether the Prime Minister agreed with him. His response was:
	“This was an entirely collectively agreed policy”.—[Official Report, 23 May 2011; Vol. 528, c. 672.]
	It is therefore no good No. 10’s distancing itself from it. In oral questions last month, the Justice Secretary said that the policy would survive the consultation. Of course, some Government Members voted against our motion—although some had the sense not to—which opposed the proposal on 23 May.
	Will the Justice Secretary outline why the Prime Minister ditched the proposal when the Government were so wedded to it only a matter of weeks ago? When was the decision made to change the Bill’s title from the Legal Aid and Sentencing Bill, as it was called up until late last week, to the Legal Aid, Sentencing and—I like this—Punishment of Offenders Bill? What did he hope to achieve by tinkering with the title?
	We know from the impact assessment that was provided with the Green Paper that removing the option of remanding offenders in custody for certain cases could save £50 million and 1,300 prison places. I note that that proposal remains. Will the Justice Secretary outline the view of the Magistrates Association on the proposal and say whether he believes that the Police Federation and the Association of Chief Police Officers support the policy?
	In the past 13 months, we have seen broken promises on minimum and maximum sentencing, prison building and knife crime. Today the Justice Secretary proposes a new offence of a mandatory custodial sentence for knife possession in aggravated circumstances, with a
	minimum sentence of six months. Even that proposal is less than that promised to the electorate in the Conservative manifesto, which stated that
	“we will make it clear that anyone convicted of a knife crime can expect to face a prison sentence”.
	That is still a broken promise, and tinkering with the Bill’s title will not change that.
	On indeterminate sentences for public protection, I have consistently questioned the Justice Secretary on how he will ensure the safety of our communities when considering which offenders should be released and when. Again, the impact assessment helpfully tells us that financial savings will be “sizeable”. From that, it is obvious that the focus is saving money, not what is in the public’s best interests. Today we find that the Justice Secretary is to undertake an “urgent review” of IPPs with a view to replacing them. Will he explain to the House why he needs another review when he has had 13 months, a Green Paper and a consultation that he has consistently described as an opportunity to review IPPs?
	How does the Justice Secretary reconcile losing thousands of front-line, experienced prison and probation staff with the desire to increase the numbers of offenders diverted into specialist drug, alcohol and mental health facilities, and how does he reconcile that with more prisoners working, because they will clearly need more supervision?
	The legal aid proposals have been roundly criticised across the board as devastating social welfare law—[ Interruption. ] Has the Justice Secretary—[ Interruption. ]

Mr Speaker: Order. There was too much noise when the Secretary of State and Lord Chancellor addressed the House, and once again there is too much noise. Let me just say this to those who are making a persistent noise: stop it, or leave the Chamber, but do not for one moment suppose that making that noise you have the foggiest chance of being called to ask a question.

Sadiq Khan: I am grateful, Mr Speaker.
	As I was saying a moment ago, the proposals on legal aid have been roundly criticised across the board as devastating social welfare law. Has the Justice Secretary seriously considered the alternative funding options proposed by, for example, Justice for All? Does he accept that his changes will have a huge impact on the viability of many law centres, citizens advice bureaux and high street practices up and down the country that do an enormous amount to provide access to justice for some of our most deprived citizens? The Prime Minister claims that the whole point of a Green Paper is to listen and to be ready to change one’s mind, so why have the Government made no substantive changes to their proposals on social welfare legal aid?
	This morning the Prime Minister said that savings that would have been made by the 50% sentence proposals will be found elsewhere in the Ministry of Justice budget. Can the Justice Secretary explain exactly where those savings will be made and when?
	We are seeing cuts to the police and cuts to prison staff and probation trusts, but where is the strategy to cut crime? The Government’s policies on crime and
	justice are a shambles. We have always known that we cannot trust the Tories on the NHS, but now it seems that we cannot trust the Tories on law and order either.

Kenneth Clarke: Well, first of all I can confirm what the right hon. Gentleman says: the proposals that I presented for consultation and the Green Paper were the proposals of the Prime Minister, the whole Cabinet and I, and the proposals that I am putting forward today in response to the consultation and the comments that we invited are the responses of the Prime Minister, the whole Cabinet and I. Indeed, we had a discussion at Cabinet this morning. We run a collective Government.
	I remind the right hon. Gentleman that we carried him with us on our Green Paper. His reaction to what the Prime Minister and I said at the time—it is all accessible in Hansard—was that this was a
	“perfectly sensible vision for a sentencing policy, entirely in keeping with the emphasis on punishment and reform that Labour followed in government”.—[Official Report, 7 December 2010; Vol. 520, c. 171.]
	We carried him with us then, and I have hopes that if he looks at the consultation and listens to the arguments, we will carry him with us again. If he wants to turn and change his mind, he is free to do so.
	Early guilty pleas were a genuine attempt to help victims and witnesses, who are mightily relieved if they hear that the accused decides to plead guilty. Had they worked, they would have saved a very great deal of money and time for the police service and Crown Prosecution Service, as well as for prisons. I do not know quite what the right hon. Gentleman’s view on this is, but I paid particular regard to the legal opinions that I was getting from serious members of the judiciary and others. The arithmetic just went too far in some serious cases. A week or two ago, I said that I thought the proposal would survive, because I thought that by introducing some judicial discretion, I could solve the problem, but I could not. For that reason, the Government are sticking with the present system. That is what consultation is all about.
	We have consulted on our remand proposals, and we are pushing on with them. Carrying on with a system whereby people are refused bail when everybody knows they will not be sent for a custodial sentence if they are convicted at their final appearance is simply not the best use of a very expensive place in our prison system. It is cheaper to put our prisoners in the Ritz—and many of them would like to be there—but while the public prefer them to be in prison, we will keep them in prison. Nevertheless, the remand proposals are, I think, extremely sensible.
	The proposal on knife possession has been made to send a message about its seriousness. I do not think that the right hon. Gentleman expressed an opinion on it, but I would advise him to support this perfectly sensible measure. On IPPs, which I have said we are minded to repeal and replace with a better version of what preceded them, I refer him to the consultation and the attacks on IPPs from sensible people. David Thomas QC, who writes the bible on sentencing so far as criminal law practitioners are concerned—his book on sentencing is the book for those practicing in the courts—described IPPs as an “unmitigated disaster”. We are carrying out
	a review to decide what will replace them by way of a strong system of determinate sentences that protects the public.
	On legal aid, I could rapidly find a quotation from the right hon. Gentleman saying that if the Labour party was in government, it would be cutting legal aid. He has nothing to say on legal aid that challenges the case I made a moment ago. On citizens advice bureaux and other forms of general advice, I hope to be able to say something on Second Reading—I am making advances, but we will see how much we can come forward with. We think there are better ways of resolving problems, and I agree that CABs and other voluntary bodies sometimes provide better advice than adversarial lawyers.
	In commenting on the probation service and other matters, the right hon. Gentleman asked where the savings are coming from. I have held protracted negotiations with the Chief Secretary to sort out my Department’s finances, in the light of some of the problems left behind. We have now resolved all those problems. Over this period we will be making £2 billion of savings a year on the total expenditure of my department, and we are looking elsewhere for another £100 million. We are not cutting any particular area but achieving efficiency, and half of that will come from administrative savings. If we have further policies to find the money we are not saving, I will come forward with them. I prefer to proceed with proper policies in joined-up writing upon which I have consulted, and got the approval of, my colleagues, and after that to come to the House. I am now considering how to ensure that the final touches to the major savings we are making in my Department can be achieved in the light of this consultation.

Alan Beith: Although the Justice Committee will continue to have concerns about the extent of the legal aid changes, may I press the Justice Secretary on sentencing? Do his Cabinet colleagues recognise that we will protect our citizens from crime not by tough talk or favourable headlines, but by appropriate sentences geared to making offenders face up to what they have done and changing their behaviour? Sometimes resources are required to do that and should not be commandeered by the prison system.

Kenneth Clarke: I agree with the right hon. Gentleman. Talking tough is easy and most politicians do it; delivering tough is rather difficult, as the Labour party discovered only too often. I will not use the quotes I have used before—the right hon. Gentleman knows them perfectly well. I agree that prison is of course the right punishment for serious and violent offenders, who will keep being sent there for long sentences whenever that punishment is justified, so that they can make reparation. However, we also tackle crime by trying to reform them, getting more of them to go straight, reducing reoffending and finding other ways of stopping the accumulation of more victims and more crimes committed by people coming through the system. I think that that is accepted by my colleagues. We are giving up the remorseless and hugely expensive increases in the prison population, and looking for a more intelligent way of protecting the public, which is our principal priority.

Gerald Kaufman: Is the right hon. and learned Gentleman aware—he certainly should be because I have told him a number of times—of
	the dire effect upon my constituents of the action he has taken already in attacking citizens advice bureaux, undermining legal aid and taking the wrecking ball to the South Manchester law centre? Is he further aware that what he has announced today will complete the process of making access to justice a prerogative of the rich?

Kenneth Clarke: I could answer each of those three things. Most of the cuts being made to citizens advice bureaux and so on are being made by local government; we are not the principal—[ Interruption. ] The Ministry of Justice is not the principal contributor to citizens advice bureaux. However, as I have already said, the Government as a whole will assist those who give quality, worthwhile advice of the kind required by the very many people who do not need legal aid and an adversarial lawyer, which is not the best way of proceeding.
	We have debated court closures before. We inherited more than 100 underused buildings, which I am afraid we had to tackle and rationalise. Our package of legal aid reforms is tackling a system that has become bloated in recent years—a system that the right hon. Gentleman’s Government kept talking about reforming but never did, because an inability to take decisions about exactly what to do about an out-of-control Government was rather typical under the last Prime Minister. When we have finished what the right hon. Gentleman says are draconian reforms, we will still have by far the most expensive legal aid system in the world after I have made our so-called cuts.

Several hon. Members: rose —

Mr Speaker: Order. In the interests of maximising the number of contributors, I appeal to hon. and right hon. Members for short questions and short answers.

Anna Soubry: Does the Lord Chancellor agree that it was the last Labour Government who, having introduced IPPs, then changed the law for no other reason than to reduce the prison population? As for the thoroughly good idea that we now scrap IPPs, would we not thereby ensure that the public—the victims and, indeed, the offenders—were better protected and had greater justice?

Kenneth Clarke: I agree with my hon. Friend. I think that the reason the last Government introduced IPPs was that they were reducing the time of a sentence automatically served from three quarters to a half. They introduced what sounded like a tough measure, with these new indeterminate sentences. However, it immediately went wrong, and they introduced more legislation after two years to try to reduce the numbers. I regret to say that my first effort was to go in the same direction and reduce them even more. I hope that I have my hon. Friend’s support in saying that the best thing is to get rid of them and return to a sensible system of long, determinate sentencing.

George Howarth: The right hon. and learned Gentleman should be aware that part of the problem with his original proposals was his failure to establish the case for community sentences as
	an alternative to prison. In his statement he refers to new, tough community sentences. Can he describe what the characteristics of a tough community sentence might be?

Kenneth Clarke: I never advocated—nor did the Government —the replacement, as it were, of short prison sentences with community sentences. I have some very curious opponents in sections of the media, and this was one of the bees they got in their bonnet almost as soon as we started, but we never proposed that. Community sentences need to carry public confidence so that magistrates can consider them properly as an alternative to prison in suitable cases—they do now, but more would. What I have in mind with tougher sentences is better organised sentences, so that, for example, unpaid work—which is one of the best community-based punishments that one can impose—doing genuinely worthwhile things for the community should be better organised and better disciplined. It should not have to be fitted in on the odd day over several years; it should be better organised on the day and based round a pretty normal working pattern of so many hours each week when it is under way. There are plenty of things that we can do—that and making more use of curfews and tagging—to build up public confidence in community sentences, which I am sure the right hon. Gentleman and I both agree would be a good thing to do, but which we would also agree is lacking at the moment.

Edward Leigh: What on earth did my right hon. and learned Friend mean when he said that he would introduce drug-free wings in jails? Does he not understand that, for the public, that is an extraordinary statement? They believe that all parts of all jails should be drug-free. To them, this sums up the irretrievably soft attitude of our entire prison system. In particular, will he protect our people—vulnerable old people—from burglars, and promise the House today that all burglars of private dwelling houses will be put in prison?

Kenneth Clarke: On the first point, I share my hon. Friend’s amazement, as I am sure anyone would on their first introduction to the criminal justice system. The fact is, however, that drugs are very widely available in our prisons, and 9% of people who have taken heroin say that they first did so in prison, where they were introduced to the drug. I am sorry that I have had to refer to “introducing drug-free wings”, but that is what we are proposing to do, and we are going to address the problems of security and rehabilitation in order to do it.
	Of course burglary is always a serious offence. It is actually one of those that are rising at the moment, although that has nothing to do with the sentence level. It is going up rather alarmingly compared with a year ago. I regard all burglary, but particularly household burglary, as a very serious offence. In the end, however, the punishment has to fit the particular crime. I shall consider what my hon. Friend has said, but I think that there should be a limit to the number of automatic sentences according to what it says on the label. Proper sentencing should be directed towards what we both agree is the first priority—namely, the proper protection of the public.

Fiona Mactaggart: In view of the mistakes that the right hon. and learned Gentleman’s team have made in their policies relating to women, what risks does he see in making domestic violence a gateway to access to legal aid? Does he think that that will make people sceptical about victims’ claims of domestic violence?

Kenneth Clarke: We have defined domestic violence, and we are not sceptical at all. Indeed, I hope that the hon. Lady will be pleased that we have looked again at this matter and extended legal aid to cases of domestic violence more than we had originally proposed. I think that our policies towards women probably have her fairly wholehearted support. We have a particular policy towards women in prisons; indeed, we are following the policy of the previous Government and the recommendations of Lady Corston. At the moment, the number of women prisoners is going down; it is the number of adult males that is still rising slightly.

Andrea Leadsom: Will my right hon. and learned Friend assure the House that, in spite of the proposed changes, support for children will remain, and that legal aid will be available in cases of domestic violence, child abuse, child abduction and enforced child adoption, to ensure that children do not suffer?

Kenneth Clarke: To give a short answer, I agree with my hon. Friend that all of those are an important priority.

David Hanson: Just so that we can judge the Lord Chancellor’s performance, will he tell us how many fewer foreign national prisoners there will be in our jails in June 2012? Perhaps he could also tell us which new countries he expects to sign agreements with over the next 12 months. From experience, I think that he will find that that is not as easy as he thinks.

Kenneth Clarke: The right hon. Gentleman will be surprised to learn that there are 1,000 fewer foreign national prisoners now than there were when the previous Government left office. I agree with him that this is very difficult to achieve, although we are pursuing transfer of prisoner agreements, and the new transfer arrangements with the EU are coming into effect. We are also working with the UK Border Agency to try to improve its effectiveness in moving people promptly. We are working at this, and so far, we are doing 1,000 better than he did.

Robert Halfon: Harlow Welfare Rights and Advice and the citizens advice bureau are deeply concerned about the proposed centralised telephone service for all but emergency cases. Will my right hon. and learned Friend assure us that that will not add an unnecessary level of impersonal bureaucracy or prevent advice from reaching vulnerable people? Will he also look into the availability of legal aid in cases of criminal negligence, so that those who have been harmed can have access to justice?

Kenneth Clarke: I had better refer my hon. Friend to the consultation document. He has taken up this matter in the past, and we have readdressed the question after listening to his and other people’s recommendations.
	We have defined much more closely the use of the telephone advice system and concentrated on those areas in which we think that it is of value. When he looks at our response to the consultation in detail, I think he will find that we have gone in the direction that he would have wished.

Grahame Morris: I note that the Justice Secretary has said that legal aid will no longer be routinely available in clinical negligence cases. That will cause a huge problem: people will be denied justice and compensation after suffering injury or worse as a result of malpractice or clinical negligence. Will he explain his justification for that decision?

Kenneth Clarke: Well, 80% of clinical negligence cases are already undertaken on a no win, no fee basis. Only 20% by number are done using legal aid. That is why we think that no win, no fee is probably the better way forward, and also why we will implement Sir Rupert Jackson’s recommendations to ensure that the costs to all parties are kept down and in proportion. Far too often under the pre-Jackson rules, the health service has found itself paying out at least as much in legal costs as in compensation to victims. On the whole, negligence cases have moved steadily towards no win, no fee arrangements for those who cannot afford the fees. That gives wider access, because legal aid is restricted through a very tight means test.

David Ruffley: Longer sentences on their own have clearly failed to cap reoffending. May I therefore urge the Lord Chancellor to press ahead with his radical and right-wing plan to get private companies into prisons to deliver serious rehabilitation that actually works?

Kenneth Clarke: I am grateful to my hon. Friend, with whom I agree. Of course one of the things that we should address is the cost of running prisons. We all want to address the efficiency with which prisons are run, just as much as we wish to address who is sent there and how many we can accommodate. I am glad to say that we have carried out a very successful tendering exercise and saved a lot of money, and I hope also potentially improved the regimes in those prisons. We intend to do the same thing again. Personally, I have no ideological hang-up about whether the successful bidder is a public sector or private sector bidder: we want the best bidder and the best quality regime at the lowest cost. That has to go hand in hand with sentencing reform. This is exciting, but it is also a much better way of running a prison system.

Mr Speaker: Order. May I gently and in a jocular fashion say to the Secretary of State that he should not be like a cruise ship in rotation? The House wishes to hear him. He swivels around, but it is helpful if he faces the House; I would be obliged to him if he did so.

Sheila Gilmore: The Secretary of State has made much of his desire to have alternative dispute resolution, which he considers to be better—in family law, for example. Presumably, he is thinking of mediation. Has he made any realistic assessment of the costs and of on whom those costs would fall? Will they
	fall on individuals or will there be some cost to his Department, which might undermine the reductions he hopes to achieve in legal aid?

Kenneth Clarke: My apologies, Mr Speaker. Probably the problem with my political career is that I have not swivelled enough on occasions.
	I believe mediation is a much better way of resolving all kinds of family and other disputes. The taxpayer will continue to pay for mediation; indeed, the mediators will be trained lawyers. Many people will take part in a much better process of resolving disputes. We are planning to increase the amount spent on mediation by £5 million, as the Under-Secretary of State for Justice, my hon. Friend the Member for Huntingdon (Mr Djanogly) tells me, in order to make savings by reducing the amount of unnecessary adversarial litigation that we fund.

Helen Grant: Does my right hon. and learned Friend agree that mediation is no panacea and that it can fail badly in family cases where there is an imbalance in power?

Kenneth Clarke: My hon. Friend has much greater expertise on the practice of family law than I do, so I rely on her and listen to her opinions with great attention. I have discussed these matters with her before. We have to get the balance right. At the moment, the generosity of the legal aid system compared with other systems is bringing more things into adversarial litigation than would otherwise be the case. Expansion of mediation is the better way of proceeding, and I hope that my hon. Friend will contribute her expertise to our development of the mediation system.

Lisa Nandy: The Secretary of State has spoken about the need for alternatives to the courts, so will he tell us what alternatives are available to victims of human rights abuses by multinationals, as in the Trafigura case, if the success fee on which many of those cases depend is no longer recoverable?

Kenneth Clarke: If, as I gather from her question, that case was conducted on a no win, no fee basis—I am not sure about that—as I announced a few weeks ago, such cases will become much cheaper for all parties as a result of the changes that we propose to make in the light of Sir Rupert Jackson’s recommendations. Legal aid will still be available in suitable cases concerning human rights. We are not resiling from those areas where the taxpayer needs to finance the small man against the state or the giant administration.

Tom Brake: I welcome many aspects of the Justice Secretary’s announcement, including greater clarity on sentencing, measures to tackle drugs, and improvements in the original legal aid proposals. Will he confirm that the Government remain committed to restorative justice, which victims give a high satisfaction rating, to probation, which is key to the tackling of reoffending, and to the not-for-profit sector? Will he confirm that no further cuts will be made in the legal aid budget or the probation service, and that he will work hard to ensure that the not-for-profit sector receives additional funds to support its work?

Kenneth Clarke: We have recommended the extension of restorative justice from the start. The more I come across it, the clearer it is to me that it is very welcome to victims and can be made very successful. We are continuing unswervingly in that regard, and intend to make more use of the system.
	I agree with the hon. Gentleman about the importance of the probation service in tackling reoffending. We should perhaps try to make the probation service better where it needs improving, but we will not be able to improve reoffending rates if no one is supervising the offenders or their behaviour on licence. I have seen reports suggesting that we are going to fill the so-called gaps in our funding—which are pretty small in comparison with what we are saving overall—by cutting the probation service, but I assure the hon. Gentleman that it has not been singled out more than any other area. We are looking for efficiencies everywhere, but we are not bouncing away from one possibility in order to cut the probation service simply to save money.

Yasmin Qureshi: Will the Lord Chancellor reconsider provision for citizens advice bureaux, given that last year my local CAB dealt with 14,000 of the most disadvantaged and vulnerable people in my constituency?

Kenneth Clarke: Only 15% of CAB funding comes from my Department, and about 50% of CABs receive no legal aid funding at all. However, I agree with the hon. Lady about the value of good CABs. Their quality varies, but the best are very good. I am anxious for us to do what we can to strengthen CABs, as are my colleagues in other Departments: we are considering what we can do to help them across Government. I am doing my best, and we will settle on some support eventually. It will not be as much as the CABs want, but I think that we will be able to help.

Philip Davies: I congratulate my right hon. and learned Friend on listening to the consultation and rowing back on some of the more damaging proposals. There is clearly much in the statement—although by no means all—that we can support. I understand, however, that the Government are proposing to make breaching suspended prison sentences punishable by a fine. Will my right hon. and learned Friend take this opportunity to make clear that only one punishment should be available to anyone who breaches a suspended prison sentence, namely being sent to prison?

Kenneth Clarke: I am grateful for the kind remarks with which my hon. Friend began his question. It seems that he agrees with a fair number of the judiciary on the proposal for a discount for early guilty pleas, and I hope that he is equally in line with the judiciary on such matters as the abolition of indeterminate sentences. We shall all begin to make some worthwhile progress on the whole field if we collaborate.
	Those who breach suspended sentences are normally punished by having to serve the suspended sentence on top of any other sentence that has been imposed. However, all such cases require a little more flexibility. All that we are adding is the possibility of flexibility in some cases.
	Adding a fine might be preferable to making the total sentence far too long: it might be best to find some other way of dealing with an offender.
	Parliament is, of course, entitled to specify sentences, but if we do that in too much detail we will fail to deliver justice, because we will not leave enough leeway and enough options for the judges and magistrates who sit and hear about all the facts of a particular case and all the circumstances of the offender.

Stephen McCabe: Is the Justice Secretary now on probation, and does he anticipate time added on or early release?

Kenneth Clarke: I think that I have been on probation for the past few decades. Sooner or later I will get the hang of it, but I am working at it. I am not going to launch into a description of reports in the newspapers. I am sure that most of my colleagues envy my ability to get into the headlines, but the truth is rather far away from all that.
	The Prime Minister and I, and the Cabinet, have developed these policies together. We have moved along together—[Laughter.] Yes, we have. We were saying the same things about policy 12 months ago, and we are saying the same things about policy today. What matters is whether the policy actually works. These proposals will be judged on whether in three or four years’ time people can see that we have sorted out the appalling mess in the criminal justice system that we inherited from Labour.

Tony Baldry: Reducing reoffending will require not only painstaking work in prisons, but working with reoffenders when they leave prison—actually at the prison gate and afterwards. Will my right hon. and learned Friend say a little more about the funding for that, and about how voluntary and community groups will be able to access it to support offenders when they leave prison and in the critical few weeks and months afterwards?

Kenneth Clarke: That is why we have proposals to improve rehabilitation and reduce reoffending by introducing a payment-by-results system. That will normally involve consortia of people coming together to rehabilitate prisoners, and payment will be based on the results they achieve. The first pilots are already in place: we have contracts in Peterborough and Doncaster, and others are about to start in Manchester and several other local authority areas. Ideally, they will involve, for example, a private sector body raising the capital with a voluntary body and a not-for-profit organisation; they can come together in a suitable consortium, first to start doing something about the offender when he is in prison and then following up on that and trying to make it far less likely that he will reoffend after he leaves prison. The payment-by-results approach to rehabilitation is one of the Government’s most significant innovations in this field, and it is making very good progress.

Yvonne Fovargue: What assessment has the Secretary of State made of the availability of face-to-face welfare advice from advice agencies such as
	citizens advice bureaux and law centres in 2013 when the Welfare Reform Bill will come into effect at precisely the same time as welfare benefits are removed from scope?

Kenneth Clarke: I have already stated that I am not in a position today to say what we can do to support citizens advice bureaux and similar organisations providing advice in the legal field and other areas such as welfare. The Government are actively considering that, and I hope we will be in a position to make an announcement soon. Part of the problem is relevant to my field, but it extends into other areas such as welfare reform. The Government are conscious of the fact that we must do something to fill some of the unavoidable gaps that have been left at present, mainly by local authorities being forced to cut the grants they can give.

Elizabeth Truss: This Government inherited the most expensive criminal justice system per capita in the world. As £100 million is being spent on administering legal aid through the Legal Services Commission, and as there are three different departments of the National Offender Management Service all doing separate kinds of commissioning—not to mention the extremely high cost per prison place—may I suggest that there are many areas where savings can be found without cutting front-line services?

Kenneth Clarke: We are abolishing the Legal Services Commission. One of the most frequent complaints that I get about the system is the sheer bureaucracy, and it has had serious problems in the past. The Under-Secretary, my hon. Friend the Member for Huntingdon (Mr Djanogly), tells me that we will save £8 million a year simply by bringing this in-house, as we are doing, but we intend to save quite a lot more on the administration of the system than that. It is hopeless, given our prime duty of protecting the public, if we waste money in that area and make it one of the most expensive and fast-growing areas of Government expenditure. We hope to make the system effective and targeted, and for it to do what we should be doing, which is protecting the public from crime and giving access to justice to the vulnerable.

Jack Dromey: Legal aid is a lifeline to those in need, often at a time of crisis in their lives. This Bill, and Government cuts to local government expenditure, will cut that lifeline to tens of thousands of citizens in Birmingham and threaten the future of our citizens advice bureaux and advice centres. Does the Secretary of State not accept that justice for the better-off alone is no justice at all?

Kenneth Clarke: That is just a very broad-brush defence of what the hon. Gentleman believes is the need to carry on paying £38 a head per taxpayer for the current legal aid system. Of course some legal aid is absolutely essential—crucial—to the liberties of our subjects and it is one of the standards of our society that we provide legal aid for people in extremis who would otherwise have no means of urging their cause. We have this grand, across-the-board system that finances what we can sometimes see is an inferior way of resolving disputes if we look for better methods of doing so. That will apply in Birmingham as elsewhere. The previous
	Government knew that the system had to be reformed; they simply could not make up their mind about what they were going to do to reform it. We are making some very well-considered proposals, which have been consulted on and thus modified to a certain extent, for getting the system back to a sensible size.

William Cash: The Lord Chancellor said that he had been personally impressed by the representations of the senior judiciary. Given that they said it would not be right as a matter either of principle or of practice to go beyond the maximum discount of one third, who are the wishy-washy liberals who have induced this row and all the fuss and problems that we have witnessed in the press over the past few weeks?

Kenneth Clarke: We did have quite a lot of support and it was not all from wishy-washy liberals. We also had some opponents who opposed the policy for reasons that I completely disagreed with. I was impressed by the input I got from serious people in the criminal justice system who are all used to discounts for early guilty pleas. Anyone who has ever had anything to do with criminal justice knows that there has always been a discount for pleading guilty early. The public do not know that and they do not like it when they are first told it, but there are good reasons for it. However, a reduction by half proved to be too much and I could not find any other way of resolving the issue and getting over the undoubted difficulties, so if there are any bleeding-heart liberals left who still think we are going to have a reduction by half, I am sorry to disappoint them, but at least my hon. Friend and I are now agreed on where we are.

Kate Green: The Secretary of State will be aware that many prisoners have very poor levels of skills and limited work experience. Will he tell us how his plans for prisoner working will improve their employability prospects when they leave prison and what plans he has to link education with prisoner working?

Kenneth Clarke: I agree with all that the hon. Lady has said and we will try to produce programmes that deliver what she obviously hopes we will do. First, we have all the work experience in prison that we are going to provide. We will try to organise serious work as much as possible with the collaboration of outside businesses which, for social responsibility reasons, are often very attracted to getting involved in this area. The work inside prison should be more meaningful and more like the ordinary disciplines of working life outside. It should, with luck, add to the training and employability of those inside. Then we have to tie in with the Department for Work and Pensions’ Work programme and what it is doing to try to get people skills and employment outside. Having a job to go to greatly increases the chances that an offender might not offend again and have more victims—that they might start to go straight—so this is a very important area and we are proposing to make very significant changes in tackling that side of the problem.

David Nuttall: Last year’s Conservative party manifesto stated:
	“Many people feel that sentencing in Britain is dishonest and misleading.”
	In order to start to restore the public’s trust and confidence in our justice system, if it is a good idea to introduce minimum prison sentences for certain knife crimes, why cannot we have such minimum sentences for other classes of crime?

Kenneth Clarke: The honesty in sentencing issue concerns the fact that it is not currently explained to people that sentences are likely to involve so much time in prison and a further amount outside on licence but subject to recall. We will see whether we can address that and make people understand more clearly what sentences actually imply. It was the previous Government, not us, who moved the amount of sentences being served from two thirds to half—a move that we intend to reverse in the cases of the most serious sexual offenders and violent criminals when we move away from imprisonment for public protection sentences to a more sensible system of determinate sentences.

Jenny Chapman: I welcome this latest and expertly executed U-turn from the Government. Cannot the Justice Secretary see that this whole row, as well as the cuts to probation, the cuts to youth offending teams, the banned people being allowed to volunteer in classrooms and the failure to close all the loopholes on the monitoring of sex offenders together create a very ugly picture of the Government’s attitude to victims of crime?

Kenneth Clarke: I have done many U-turns in my time. They should be done with purpose and panache when we have to do them, but I do not think this is a U-turn at all—[ Laughter. ] No, I do not. Let me explain—[ Laughter. ]

Mr Speaker: Order. I think Opposition Front Benchers have taken some sort of tickling powder. I have been listening with bated breath to the Secretary of State for the best part of 20 years and I want to continue listening to him.

Kenneth Clarke: We are aiming at a package of radical reform of sentencing to make it more effective in protecting the public, and at the same time making a substantial contribution to reducing the country’s deficit, which is vital to our economic recovery. We consulted on what is a leviathan of a Bill, with a huge range of proposals. We have changed some of it and have come up with what we intended, which is actually a better balanced package of good reform of the sentencing system. It achieves the savings we wanted. When I want to exercise a U-turn in future I shall give the hon. Lady notice, but this is not such a manoeuvre.

Stewart Jackson: The opportunistic shroud-waving of the Opposition obscures the fact that Labour never enacted the Prisoners’ Earnings Act 1996, which would have allowed victims to be compensated by the work of prisoners. Will my right hon. and learned Friend confirm the welcome news for my constituents that vexatious, long drawn-out and costly taxpayer-funded immigration appeals are coming to an end?

Kenneth Clarke: I am grateful to my hon. Friend for welcoming our moves on prisoners’ earnings and their use to support victims. I agree that we have too litigious a society, and we should not have a legal aid system that just contributes to it. Our legal aid reforms are much overdue and will get us back to looking at more sensible ways of upholding the rights of citizens and enabling them to settle their disputes.

Angela Smith: Will not this U-turn on sentencing mean that some of the long-term savings planned by the Ministry of Justice will no longer be achievable? If that is the case, which other parts of the justice budget will be cut to compensate?

Kenneth Clarke: Roughly, the spending reductions we are making are from £9 billion a year to £7 billion a year. The discount for early guilty pleas was meant to contribute about £100 million of that. The move away from indeterminate sentences to a more sensible determinate sentence-based system will in the long run save quite a lot of money, because at the moment thousands of people are in prison and no one has the first idea when or if they will ever get out. Of course we have to readdress the issue, now that we have consulted; we have now settled the financial position with the Chief Secretary and will look for more efficiencies and savings. I am quite confident that we will find them, because so far we are making very good progress in making considerable reductions in the bloated expenditure that we inherited.

Michael Crockart: Does the Secretary of State agree with me and my previous experience, not only as a wishy-washy liberal but as a serving police officer, that one of the major barriers to rehabilitating offenders is the Rehabilitation of Offenders Act 1974? Thirty-seven years is quite long enough to wait for a reform. When shall we see it?

Kenneth Clarke: I hope soon. I take on board the hon. Gentleman’s views, with which I have considerable sympathy. We take very seriously the workings of the Rehabilitation of Offenders Act and its impact on reoffending and rehabilitation, and policy is being finalised at the moment.

Diana Johnson: Will there be specific provision in the Bill on children and legal aid? In particular, will children in local authority care be able to access legal aid to challenge the local authority’s decisions?

Kenneth Clarke: Again, I am indebted to the Under-Secretary, my hon. Friend the Member for Huntingdon. In response to the consultation, we changed the measure in the direction the hon. Lady would like, so the answer is yes.

Jason McCartney: I particularly welcome the plans to introduce a full working week across the prison estate, and the fact that the money earned by prisoners will go towards supporting victims. As a former RAF officer who was involved in convening courts martial, I wonder what opportunity my right hon. and learned Friend has had to look at the work ethic in the military corrective training centre in Colchester.

Kenneth Clarke: I am grateful for my hon. Friend’s welcome for our policy. Let no one underestimate: it is going to be difficult to extend the work ethic and a work programme throughout prisons. It will steadily be achieved and we are embarking on it. There are good examples in the Prison Service now—one or two, where a working week is in place for the prisoners. That needs to be rolled out throughout the estate. I will certainly take advantage of looking at the approach in the military prisons and their work-based ethic, which I understand to be the case, though I have not visited one for many years.

Kevin Brennan: I am beginning to wonder whether it was a mistake to separate the Ministry of Justice from the Home Office, because we now seem to have one Ministry for arresting people and another for letting them go. If the right hon. and learned Gentleman wants to get rid of his reputation as a wishy-washy liberal, will he go the whole hog and rename his Bill the “Legal Aid, Sentencing and Punishment of Offenders (Hang ’em, Flog ’em and Birch ’em) Bill”. That might satisfy Members on the Conservative Benches.

Kenneth Clarke: I have to admit that I thought that was a rather extraordinary way of reorganising the Departments when it was first done, and so did the judges. They greatly resisted going into the Ministry of Justice because they could see that the vast explosion of expenditure on prisons would crowd out the budget for the courts. The Ministry of Justice is a bit like a nest with a cuckoo in it—[Interruption.] It is not me. The previous Government kept feeding the Prison Service—exploding the Prison Service—and then cutting expenditure on every other aspect of the Department’s activities as it was thrown out of the nest. We need to stabilise the prison population, get the costs under control, use it more effectively and have a more intelligent way of working with the rest of the Department to deliver things.
	The long-term future of the Department will be looked at. In my experience, the reorganisation of Departments hardly ever achieves any worthwhile objectives, whatever the Prime Minister of the day thought he was achieving. Too much confusion is caused by moving them all around and it is best to stick with the structure that we have, but I would not have gone for the present structure in the first place, if I had had anything to do with it.

David Mowat: Even after these changes, we will be spending between four and 10 times as much on legal aid as other countries, some with similar jurisdictions to ours. Does this not imply that there is a structural issue in parts of our legal system, and is there not more that we could do to address this structural issue in the years ahead, in which case we would make real savings?

Kenneth Clarke: My hon. Friend talks common sense about where we are with the legal aid system. I still think it is important to have a legal aid system to enable vulnerable people and people at serious risk to protect their rights, even when they cannot afford a lawyer, but there are plenty of other things wrong with the justice system. We are bringing forward proposals to try to improve the efficiency of the courts. At present the courts provide a daunting experience to any member of
	the public who finds himself unlucky enough to have to go through any form of litigation. The delays, waste of time and cost are almost endemic in the system.
	We are tackling the efficiency of the criminal justice system—that applies to the civil justice system just as much—to try to ensure that the whole legal process becomes part of the public service and is there to be used by people who have to use it, or have to do justice, with rather more efficiency and rather less daunting waste and inconvenience than is often the case at present. The costs must be brought down through large parts of the service.

Ian Lucas: The Lord Chancellor is a respected parliamentarian. It has become increasingly clear during the statement that he does not agree with the sentencing policy that the Prime Minister has foisted on him in relation to the reduction of sentences. Why does he not be honest, be true to himself, retain respect and tell the Prime Minister where to go?

Kenneth Clarke: The Prime Minister, other colleagues in the Government and I have all had perfectly reasonable discussions about the criminal justice system. We all presented a package of proposals for consultation and we are presenting the same package today in response to that consultation. This is a sensible way of running a Government. I realise that politics has become a branch of the celebrity culture, but the idea that what is really interesting is whether the Prime Minister and I are arguing or whether the Prime Minister and I are agreeing is largely obscuring what I think is an extremely positive package of proposals which, after consultation, is better fitted to meet the aspirations that we all had when we embarked on the policy in the first place.

Jessica Lee: It is a sad fact that half of adults leaving prison are reconvicted within a year of release, a legacy of the previous Government. I therefore welcome the proposal for a work programme for offenders in prisons. Does my right hon. and learned Friend agree that this should surely provide prisoners with a brighter future and prevent them from becoming a menace to society again, not least to the law-abiding citizens of Erewash?

Kenneth Clarke: I agree entirely with my hon. Friend. The figure she repeats—one in two ex-offenders will be caught and convicted within a year of leaving prison—is truly extraordinary. I agree that proper change is needed. We need to protect the public from the worst of that, and where prisoners have the gumption to respond and try to get themselves out of their way of life and become honest citizens again, we should make more of them do so. I am sure that that would be appreciated in Erewash, as it would across the rest of the country.

Jeremy Corbyn: The Secretary of State invited us to look at what the situation will be four years down the line. Does he not expect there to be a larger and more expensive prison population, with prisoners serving very long sentences for some of the offences for which he is increasing the tariff, and that there will be a large number of people denied access to legal aid, fewer advice services, fewer CABs and a lot of people very disgruntled that justice is not available to them because they are too poor?

Kenneth Clarke: I always believe that policy is best judged by results and that half the fuss that surrounds policy making completely fails to predict what will go right and wrong thereafter. I firmly believe—I am quite confident—this package of policies will not have the results that the hon. Gentleman fears, but we will both know in four years’ time. The whole purpose of the policies is to achieve the precise opposite of what he holds up as a possible outcome. We had to have radical reform, and it has to be carried forward in a business-like and sensible way to deliver a criminal justice system and access to civil justice of the kind we require.

Richard Graham: My constituents will welcome the Secretary of State’s announcement today that serious sexual offenders, such as those recently convicted for rape and assault in Barton street and Eastgate street in Gloucester, will now serve two thirds of their sentence in jail, rather than half. They will also welcome the fact that illegal immigrants will no longer have access to taxpayer-funded legal aid. Does my right hon. and learned Friend agree that successful drug and alcohol rehabilitation programmes run by organisations such as the Nelson Trust near my constituency in Stroud have an important role to play in these new policies?

Kenneth Clarke: I agree with my hon. Friend. It is far more sensible to have an appropriate determinate sentence, and serious sexual and violent offenders—those serving longer sentences—should go back to having to serve two thirds before being eligible for release. Indeed, if the Parole Board thinks that they should not be released, they should probably serve their whole term. That is far superior to the lottery of the IPP that we have at the moment. I strongly agree that we must do something to encourage the many people in the voluntary sector who want to work with ex-offenders and can successfully help those who can be rehabilitated to get themselves out of a life of crime.

Peter Bone: Parliamentarians on both sides of the House will welcome not only the Secretary of State’s statement, but the whole process. To be helpful to him, I wonder whether he could solve the economic problem overnight by sending the 11,000 foreign nationals incarcerated in prisons in England and Wales back home on a plane tomorrow and forget their human rights.

Kenneth Clarke: There are some measures in the consultation on the release of foreign national prisoners after they have served their tariff and conditional cautions for people who go away on the basis that we will not let them come back. Those are intended to reduce the rather ridiculous proportion of foreigners in the prison population. We are working with the UK Border Agency on the difficult problem of how to get people out of the country when they have no papers and the receiving country will not take them. My instincts are entirely those of my hon. Friend’s. It is quite absurd that 13% of the prison population are foreign nationals and we must work to get that figure down.

Several hon. Members: rose —

Mr Speaker: Order. I am keen to accommodate remaining Back Benchers, but I reiterate my ritual appeal for brevity.

Sarah Wollaston: On legal aid for medical negligence cases, can the Secretary of State reassure the House that he has made an assessment and we are not going to end up transferring additional costs to the NHS Litigation Authority?

Kenneth Clarke: Obviously, the NHS Litigation Authority has been involved in our consultation, but at the moment I see no reason why that should be the consequence at all. Indeed, I think—I hope—that the NHS will be spared some of the more speculative litigation that has taken place, whereby people really hope that somebody will pay a kind of settlement to avoid incurring the further costs of resisting the claim. In genuine cases, we have to ensure access to justice, of course, because clinical negligence claims are very important, and we think that the no win, no fee system, as modified, is the best way of doing so.

Martin Vickers: The Lord Chancellor said in his statement, “Public confidence in the criminal justice system is unacceptably low,” and sadly that is the case. Does he agree that only when sentencing policy more truly reflects public opinion will that confidence return?

Kenneth Clarke: Of course, and that is why I have stressed some of the measures that we are introducing today to try to send the right messages about serious violent and sexual crime and about knife crime. No sensible or civilised person in this country suggests anything other than serious punishment for crimes of that kind.
	It is very difficult to win public confidence, because in the course of an ordinary life most people’s contact with the criminal justice system is very sporadic indeed, so most people do not know anything about indeterminate sentences, discounts for early guilty pleas or any of the things that we talk about here. I have a rather sad feeling that for as long as I can remember opinion polls have always said that people think sentences are too short and the criminal justice system is too lax, but, on sensible public opinion, we are their servants and we are trying to reassure them that the criminal justice system will, indeed, protect them, as it should do.

David Evennett: Does my right hon. and learned Friend agree that time in prison should be time well spent and, therefore, that education and training, rather than just leaving prisoners to languish in their cells, is absolutely essential?

Kenneth Clarke: I entirely agree with my hon. Friend, who has expertise in that subject, and I am working very closely with my right hon. and hon. Friends in the Department for Work and Pensions. What they are doing to improve the training and work opportunities of people in this country has to include ex-offenders, and we have to ensure that in parallel we do more to get our ex-offenders settled in work wherever the ex-offender is prepared to make the effort to get into honest employment.

Rehman Chishti: I welcome the Secretary of State’s statement and, in particular, the abolition of legal aid for squatters resisting eviction. Can he clarify how much was spent on that in the past 10 years?

Kenneth Clarke: No. I shall have to write to my hon. Friend with that information, but I am grateful for his welcome. I do not know whether anyone would oppose this, but it is plainly wrong to make legal aid ordinarily available to people who, by definition, are squatting in properties for which they do not have a legal claim.

Amber Rudd: Although I acknowledge the need for cuts to legal aid, may I share with the Secretary of State my concerns about local advice agencies, which sometimes provide essential local advice to the most vulnerable? Will he work closely with his ministerial colleagues to ensure that some provision is made for such agencies to continue?

Kenneth Clarke: I will take back to my ministerial colleagues the fact that several respected Members have made that point quite strongly in the course of these exchanges. We are discussing it, and we know that we have to respond to it. On the question of which Department will eventually announce the outcome, I am not quite sure, because several Departments are involved, but we are all seeking to find a solution to it.

Paul Maynard: The Howard League for Penal Reform’s recent report on short sentences makes it clear that one reason for the devastatingly high level of reoffending after sentences of under six months is a lack of adequate resettlement support for those leaving prison. In retaining shorter sentences, will the Secretary of State reassure me that more will be done to ensure that such prisoners are helped to have a useful and purposeful life after leaving prison?

Kenneth Clarke: I agree with my hon. Friend’s analysis. The reoffending rates are very bad for short-term offenders because they are often let out again without the follow-up that is given to more serious criminals. Of course, the problem is that one cannot simply extend the sentence. Short-term sentences remain suitable for some people. Indeed, some people do not really need help but would benefit from being put in prison—for example, uninsured drivers, about whom I was talking earlier today. People who are otherwise respectable and take no notice of the law by driving while uninsured will soon take notice if they are given a short prison sentence. They do not require rehabilitation when they are released; most will almost certainly not drive without insurance again. As for the others, we are where we are. Some people leave the magistrates no alternative because everything else has been tried and they keep offending. If we could get stronger community sentences and make them more magistrate-friendly, some of the people about whom my hon. Friend is concerned might be put on to a more constructive path that will help them to stop offending.

Gavin Barwell: As a London MP, I warmly welcome my right hon. and learned Friend’s proposal to introduce mandatory sentences for adults who use a knife to threaten and endanger. He
	will know that many knife crimes are committed by younger offenders. May I implore him to send a similarly unambiguous message to those offenders?

Kenneth Clarke: I think the message from the whole House is that we disapprove of the carrying and using of knives. We keep striving to reverse what recently became, particularly in parts of London, almost a fashion for knife crime. I am sure that the offence that we are going to introduce will reinforce the message we are giving. My right hon. Friend the Home Secretary has also announced a whole package of measures on knife crime. The Government will take my hon. Friend’s advice in giving very high priority to this subject.

Paul Uppal: The Justice Secretary touched on the issue of clinical negligence, particularly in cases where litigation costs can often far exceed the actual sum insured. To echo the sentiment expressed by my hon. Friend the Member for Totnes (Dr Wollaston), can he give the House any guidance on measures that can be introduced to ensure an early resolution? The NHS Litigation Authority, trusts, GPs and consultants are often loth to admit liability, and that leads to undue costs and delayed and protracted negotiations.

Kenneth Clarke: A lot of that lies within the province of my right hon. Friend the Secretary of State for Health. Many people in the health service realise that the key way to proceed is to settle claims and pay up promptly when someone has obviously made a mistake, while fighting resolutely cases brought by people who are acting speculatively. Many cases could be resolved by better complaints procedures or by attempts to discuss the matter. One of the things we are exploring is the early exchange of reports so that both sides know exactly what expert evidence is available to them and do not hold their own evidence back, because that paves the way to a resolution of the claim. I am sure that everyone in the NHS is as anxious as my hon. Friend and I are to see some progress on this. Perhaps making legal aid less available in this area will stop some people being quite so litigious and make them a little more constructive about how to sort out a proper remedy.

Andrew Griffiths: My right hon. and learned Friend’s statements about knife crime will be welcomed by my constituent, Yvonne Upton, who has been campaigning since she lost her son, Connor, to somebody who chose to carry a knife on a night out.
	As regards drugs in prison, does my right hon. and learned Friend agree that under the previous Government too many prisoners were on long-term methadone prescriptions and parked in state-induced dependency, and that getting those prisoners drug free with an abstinence programme is key to proper reform?

Kenneth Clarke: There are people with better clinical expertise on drug rehabilitation than I, but I share my hon. Friend’s instincts. We are seeking to make proper drug rehabilitation programmes work. There is obviously a danger that it sometimes becomes easier to maintain people on methadone, and that is going nowhere in
	some cases. I am sure that methadone has a place in all this, because people with more knowledge than I have insist that it does, but we are looking for proper rehabilitation wherever possible, with the aim of abstinence and making the person drug free.

Jane Ellison: I warmly welcome the Secretary of State’s commitment to making our prisons more drug free. A constituent of mine has become addicted while in prison and is desperate to get off his addiction lest he be drawn into circles of crime on his release. Can my right hon. and learned Friend make a commitment to do more for such people who want to get clean and go straight?

Kenneth Clarke: I hope that we can do more. My right hon. Friend the Secretary of State for Health is looking at drug rehabilitation services generally for people who do not offend, as well as for people who get themselves into trouble with the law. This is a very important area. The majority of crime in this country is linked directly or indirectly to drug abuse of some kind. The majority of prisoners have indulged in the abuse of drugs shortly before their admission to prison. It is essential that we respond to my hon. Friend’s plea that such programmes are supported and made more effective.

Jake Berry: My constituents will welcome the Secretary of State’s announcement that more life sentences will be available to judges when dealing with serious, repeat and violent offenders. What offences that will cover and, specifically, which repeat offences will eventually carry the life tariff?

Kenneth Clarke: I think there will be an automatic increase in the number of life sentences when we get rid of IPPs. When indeterminate sentences were introduced, some of the people who were given IPPs were in really dangerous categories and had been convicted of offences for which life imprisonment was already the maximum offence. When we change it, judges will put such people back on life sentences. The whole IPP experiment was a mistake. We have indeterminate sentences in this country—they are called life sentences. They are better managed and are the proper way to deal with the most serious offenders. I think that some of the most serious offenders who get IPPs now will in the future get life sentences, just as judges always gave them before.

Rob Wilson: Many of my constituents want reassurance that the victims of crime will be properly catered for in the new Bill. What discussions has the Secretary of State had with the victims commissioner, and will he tell us a little about them?

Kenneth Clarke: I have very welcome conversations with the victims commissioner from time to time, and very much hope to involve her more closely than has been the case in the development of policy. Obviously, the concerns of victims should be at the heart of all that we do. I was told as I came in that the victims commissioner, Louise Casey, has just issued a statement about our
	announcements today. It is quite long and I will not read it all. [Hon. Members: “Go on!”] Well, I will read just the first sentence. She says that she sincerely welcomes
	“the government’s response to the Green Paper consultation”
	announced today. I will try to keep her support because it is extremely important that victims have confidence in what we are doing.

Andrew Percy: The transfer of foreign national prisoners is obviously not a simple issue. However, last year, Humberside police and East Riding of Yorkshire council brought to my attention the case of an EU national who had committed 33 crimes against the good people of Goole. We were told that deportation, if it did take place, could take up to two years. Surely it is completely and utterly unacceptable for any EU national to be in a British jail; they should be in their own countries in their own jails. Any EU nationals who are released from our jails should be deported immediately.

Kenneth Clarke: I am glad to say that there is an agreement on the transfer of prisoners within the European Union—[ Interruption. ] Yes, it was negotiated by the previous Government and it will come into force in November this year. Off the top of my head, only two countries, Ireland and Poland, have derogated from it and are delaying implementation. I look forward to the proper transfer of prisoners to all the other countries. It means that British criminals will be brought to our prisons to complete their sentences and that foreign prisoners will be returned elsewhere. We will see who benefits. It is obviously very sensible from every point of view.
	We constantly consider with the UK Border Agency the quicker removal of prisoners who are due for deportation. I concede to the UKBA that deportation is not always as simple in individual cases as it is made to sound. It is difficult to get some countries to accept former prisoners, and it is, of course, difficult to get some people to go to other countries. Sometimes, their very identity or nationality is the subject of constant dispute.

Philip Hollobone: Should not judges and magistrates be made aware of the success or otherwise of their individual sentencing decisions, by being kept informed of the reoffending rates of the offenders whom they send down?

Kenneth Clarke: There is a lot of work going on about the transparency of justice and the publication of local figures. We all need to know more detail about what is being done at local level and what the consequences are of the administration of justice in our localities. I am sure that all the best magistrates would welcome some feedback and more information about what is happening as a result of their sentencing policy.

Points of Order

Hilary Benn: On a point of order, Mr Speaker. We have today, for the second week in a row, had a written statement, followed by a prime ministerial press conference, followed by an oral statement. Last week it was on the Health and Social Care Bill, today it was on sentencing and legal aid. It is pretty unusual to have two statements on the same subject on the same day, but do you share my concern that it is discourteous to the House, because it means that the media have a chance to question Ministers on policy—the Prime Minister in the last two cases—before Members of this House get the chance to ask questions? As such, it is not in keeping with the spirit of our rules.

Mr Speaker: I thank the right hon. Gentleman for his point of order and for notice of it. I have made clear my view that important announcements of policy should be made first to this House, with the opportunity of questioning Ministers. Although I understand the pressures of the 24/7 news agenda, that remains my firm view. I am therefore uneasy at sequences of events in which a written ministerial statement is followed, or even preceded, by briefing outside the House, with the opportunity to question Ministers in the House by means of an urgent question or following an oral statement coming only some time later.
	The House will recall that, on 20 July last year, it asked the Procedure Committee to consider whether the rules of the House should be changed. The Committee reported in February, and the Government’s reply was published a month ago. There are thus matters awaiting resolution by the House itself. In the meantime, the right hon. Gentleman may be assured that I will remain vigilant in the House’s interests, and will be ready to use my powers to permit questioning or debate if I see fit to do so, and indeed for such period as I see fit. I hope that is helpful.

Peter Bone: Further to that point of order, Mr Speaker. I wish to show that there are concerns on both sides of the House, and to tell the shadow Leader of the House that I did not think he went far enough. Last night on Sky News, Jon Craig reported not only the detail of the statement but the media schedule. The policy was also reported in this morning’s newspaper. That clearly cannot be in order under current practices.

Mr Speaker: I note what the hon. Gentleman has said, and I think that the House will have noted it as well. I do not think I need to add to what he has said, but I am nevertheless grateful to him.

Helen Jones: On a point of order, Mr Speaker. We shall shortly be considering a very important motion on the recommittal of the Health and Social Care Bill, and I understand that the Secretary of State for Health is not going to be here to move it and be questioned on it. Have you had any communication from the Secretary of State about his presence or otherwise, or has he simply resigned or gone out looking for another job before he is pushed?

Mr Speaker: I am grateful to the hon. Lady for her point of order. I would simply say that no, I have had no indication on that matter. Of course, she and I came into the House together in 1997, and she will be as aware as I am that precisely who moves motions on the part of the Government is a matter for the Government. I think I know the Minister who is going to move the motion, and if he wants to respond he is perfectly welcome to do so. He is under no obligation, but he may.

Simon Burns: Further to that point of order, Mr Speaker. It might help you and the hon. Member for Warrington North (Helen Jones) if I point out that the precedents for recommittals are not that common, but that if one looks at the previous recommittal, it was done in 2003, by the then Minister of State, one Mr Tony McNulty.

Mr Speaker: I am grateful to the Minister of State. I think that we will leave that as a no-score draw or a score draw, as the case may be. I am happy to take any further points of order, but if the House’s appetite has been satisfied, we will move on.

BILL PRESENTED
	 — 
	Legal Aid, Sentencing and Punishment of Offenders Bill

Presentation and First Reading (Standing Order No. 57)
	Mr Secretary Kenneth Clarke, supported by the Prime Minister, the Deputy Prime Minister, Mr Chancellor of the Exchequer, Mrs Secretary May, Mr Secretary Lansley, the Attorney-General and Mr Jonathan Djanogly, presented a Bill to make provision about legal aid; to make further provision about funding legal services; to make provision about costs and other amounts awarded in civil and criminal proceedings; to make provision about sentencing offenders, including provision about release on licence or otherwise; to make provision about bail and about remand otherwise than on bail; to make provision about the employment, payment and transfer of persons detained in prisons and other institutions; to make provision about penalty notices for disorderly behaviour and cautions; and to create new offences of threatening with a weapon in public or on school premises.
	Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 205) with explanatory notes (Bill 205—EN).

Jobcentre Plus (Wales)

Motion for leave to introduce a Bill (Standing Order No. 23)

Hywel Williams: I beg to move,
	That leave be given to bring in a Bill to require the Secretary of State to make provision for the transfer to the Welsh Government of certain functions relating to the work of Jobcentre Plus offices in Wales; and for connected purposes.
	The Bill’s aim is to devolve responsibility for elements of Jobcentre Plus’s work in Wales to the Welsh Government. I am grateful for the support I have received from Plaid Cymru and the Scottish National party, the Alliance party, the Liberal Democrats, the Green party and the Labour party.
	The argument for the measure is straightforward. The Welsh Government have responsibility for education and training under the Education, Lifelong Learning and Skills portfolio, and for the economy under the Business, Enterprise, Technology and Science portfolio. They operate a large-scale programme of social inclusion in particularly deprived areas, one aim of which is to improve employability. Jobcentre Plus will work through the Work programme with large numbers of Welsh people who are looking for work, but the responsibility for that activity in Wales lies with the Government here. I think that getting unemployed people back to work would be more effective, better organised and co-ordinated, and that accountability would be much stronger, if that was the Welsh Government’s responsibility, working closely of course with the Government in London.
	It would be up to the Welsh Government to determine how to organise matters, but elements of a possible model might be derived from Northern Ireland, where the Department for Employment and Learning works to promote learning and skills, to prepare people for work and to support the economy. Its objectives are to promote economic, social and personal development through high quality learning, research and skills training, and to help people into employment. It works with individuals to improve their skills and qualifications, with those who need support and guidance to progress their employment, including self-employment, and with businesses in the public and private sectors.
	Some of the Department’s key activities include: enhancing the provision of learning and skills, including entrepreneurship, enterprise, management and leadership; increasing research and development, creativity and innovation; developing and maintaining a framework of employment rights and responsibilities, and, crucially, helping individuals acquire jobs, including through self-employment, and improving the links between employment programmes and skills development.
	All that offers many elements that we could adopt in Wales to tailor a comprehensive employment service, better suited to the needs of our country. That need, I am sorry to say, is great.
	I am glad that unemployment in Wales was lower in the last quarter, but it still stands at 115,000 people or 7.9%, with the United Kingdom level being 7.7%. The number of jobseeker’s allowance claimants increased in the last quarter by 1,700 to 72,000, and total employment was up at 1,349,000.
	However, the number of economically inactive Welsh people stands at 480,000, including many older people, who find it particularly difficult to find a job. They represent 25.3% of the working-age Welsh population, compared with 23.3% for the UK as a whole. Most tellingly, 77,000 Welsh people have been without a job for 10 or more years. The need is indeed great.
	My aim in the Bill is therefore to integrate better learning, skills and development and job finding, education and social action, enterprise and self-employment in Wales, all under the Welsh Government, to fashion them into a better organised and more coherent form. That change would help unemployed people build on their individual skills and find relevant and worthwhile employment that meets their needs and those of society. It would also help to promote Welsh business and enterprise, by working with the grain of the system of Welsh government in a simplified, one-stop model. Essentially, this is a common-sense matter of improving co-ordination and delivery, and of locating the task at the most local level where it can be best carried out.
	I have concerns about the current system, and particularly about the Work programme. Currently, job seeking is all too often associated negatively in the public mind with claiming benefits. That creates a negative and often stigmatising view of the process, when it should be part of our wider contract between people and communities. We should assist in the provision of work, which allows people to pay taxes and contribute to the wider society. There is no reason why that negativity should be so, particularly if job seeking is linked with positive activities such as providing education and training, and enterprise and development. Job seeking could and should be viewed as positively as entrepreneurship is viewed.
	Jobcentre staff do a difficult job in hard circumstances. It was difficult enough running the new deal in good times, but now times are very much harder. It is not simple or easy to find employment, especially for people who have been out of work for a long time and those who face a disability of some sort. We have many such people in Wales. People fear that, under the Work programme, some severely disadvantaged people will not be helped because there are insufficient funds to meet their more complex needs. The task in deprived areas will also be difficult, because there will be few job outcomes. People fear that such areas will be sidelined.
	Ministers have said that the Work programme will tackle the endemic worklessness that has blighted so many communities for decades, but I fear that insufficient account has been taken of the differences between labour markets, the different conditions that businesses, especially small businesses, face, and the nature of education and training in Wales. In Wales, much of the expertise in such matters lies with the Welsh Government.
	Furthermore, in Wales, the voluntary sector and the capacity of organisations to become subcontractors in the Work programme varies enormously. I have very competent and successful third sector employment organisations in my constituency, such as Agoriad and Antur Waunfawr, but in rural Wales in general we have a preponderance of voluntary bodies that do not employ professional staff. There must be doubts about the ability of some such organisations to participate.
	Interestingly, Neil Lee, a senior economist at the Work Foundation, has pointed out that the
	“Work programme is based on a national payment structure and does not take into account local and regional variations in labour demand…There is the danger that private contractors will focus on investing in places where they are more likely to get people into work to secure a return on investment.”
	There are many such places in Wales, most notably the Rhondda, where I believe there is one job for every 120-odd people seeking it.

Chris Bryant: Eighty-four.

Hywel Williams: I am grateful to the hon. Gentleman for that correction.

Kevin Brennan: Will you mention me and my hon. Friend the Member for Wrexham (Ian Lucas) as well?

Hywel Williams: Be quiet.
	The financial risk could be passed down to small, local voluntary sector organisations, which could be knocked out of the market as a result. There is a real danger of market failure.
	Job search provisions should be devolved the Welsh Assembly, so that we can develop a Welsh solution to employment as part of a comprehensive solution to getting people into work and keeping them there. I commend the Bill to the House.

Guto Bebb: It gives me no pleasure to oppose the Bill, because the hon. Member for Arfon (Hywel Williams) is not only my constituency neighbour but my MP. I thought long and hard before deciding to oppose the Bill, but ultimately I believe strongly that it is a diversion from the issues facing us in the reform of the welfare state. The Government are currently introducing real and significant changes to the way in which we approach the welfare state and, more importantly, the way in which we deal with economic inactivity in Wales, and my concern is that the Bill would divert us from the need to ensure that people in Wales have the opportunity to work and contribute to society.
	Despite the hon. Gentleman’s best intentions, the Bill would create confusion and a problem in establishing an equal and level playing field between England and Wales. The truth of the matter is that the Government have already embarked on a significant review of how Jobcentre Plus works, not just in Wales but throughout the United Kingdom, and I see no reason to complicate the situation in Wales. Nowhere in the United Kingdom is the need for the Work programme and changes to the welfare state greater than in Wales. Some of the figures are truly appalling. For example, the level of economic inactivity in the UK is about 23%, but in Wales that approaches 28%. In his constituency, the level is 27%, and in mine it is 25%. We need changes to the system that will create results, not bureaucratic changes moving powers from one place to another. We need results.
	Economic inactivity rates are a symptom of the fact that the Welsh economy is far too dependent on the public sector. That is in no way an attack on the public sector. Many public sector workers do an immense
	amount of work ensuring that we have good services in our schools and hospitals, but we cannot continue with an economy in which about 70% of gross domestic product is produced by the public sector. We need the private sector to be able to play its full part in the economy, creating employment—full employment, I hope.
	Some of the figures on job creation in Wales over the past year have been encouraging. That job creation is coming not from the public sector, but from the private sector, which we need to applaud. That is also a development that will be fully supported by the Work programme. The question we have to ask ourselves today is: would the changes proposed by the hon. Gentleman result in a single additional person going back to work, or would they simply lead to more confusion and further bureaucratic problems? With all due respect, I challenge him. He has in his constituency wards such Peblig where 34% of the population are in receipt of key state benefits, and the same is true in other wards in his constituency such as Marchog and Nantlle. Does he really believe that moving responsibility for Jobcentre Plus from London to Cardiff would result in a single individual moving from benefits to work? I doubt it very much.
	In effect, the Bill shows the difference between the Conservative party in Wales, which believes in results, and the other parties there, such as Plaid, which believe in process. The reality is that results are what count, and in my view the Government’s Welfare Reform Bill proposals will create real change. However, we also need to think carefully about the proposal to link these major changes to the welfare state and the Work programme with the Welsh Assembly department for economic development. Economic development in Wales has, to be perfectly frank, been a basket-case since the Welsh Development Agency was abolished under the previous Labour Administration in Wales.
	When the WDA was abolished we probably lost one of the most effective vehicles for private sector investment in Wales. Just last week, the Welsh Affairs Committee took evidence from Sir Roger Jones, whose description of the decision to take the WDA into the Welsh Assembly is worth quoting. He said that it was like
	“being micro-managed by people who don’t know much”,
	which “is a dangerous practice.”
	My concern is that bringing Jobcentre Plus into the Welsh Assembly would do the same again. I wonder what benefit is to be gained by losing the expertise from Jobcentre Plus and allowing decisions to be made by Welsh Assembly officials with no previous experience of dealing with jobcentres or the Work programme. It would be a huge mistake.
	The other thing we need to debate is how, in order to change attitudes in Wales, Jobcentre Plus officers and the Work programme must provide hope for people. We must provide the opportunity for aspiration to become a reality in our communities in Wales. We also need to provide support for communities and individuals wishing to get back into the work force in Wales, as well as encouraging the concept of self-reliance. I am concerned that if we move the responsibility for such major changes to the Welsh Assembly, we will create confusion at a time when we have an opportunity to create far-reaching change that will allow communities and individuals to become self-reliant, to stand on their own two feet and to contribute to society.
	I am concerned by the comments that Glenn Massey made in his evidence to the Select Committee on Welsh Affairs last week. He stated that as a result of constant changes imposed by both Labour Administrations and the previous Plaid Cymru-Labour Administration, Welsh Assembly Government staff were “disillusioned”, suffering from low morale and finding it difficult to become motivated. I ask the House this question: if we want to encourage people back into the workplace, do we want that encouragement to come from staff who have been so demoralised by the Labour and Labour-Plaid Administrations, who have served Wales so badly over recent years? The situation is simple. We have here in Westminster a coalition Government who are willing to tackle the real problems faced by our communities. They are willing to tackle deprivation and to try to persuade people, for the first time in a generation, that work will pay—not just financially, but by giving people value and a feeling that they are contributing to society.
	The proposed Bill would divert us from both the need for proper change and from moving things forward. I therefore urge the House to reject the proposition and support the Government’s attempt to create real change, rather than bureaucratic change.

Question put (Standing Order No. 23).
	The House divided:
	Ayes 21, Noes 127.

Question accordingly negatived.

Health and Social Care Bill (Programme) (No. 2)

Simon Burns: rose—

David Wright: On a point of order, Mr Deputy Speaker. Will you find out from the parliamentary authorities whether the monitors are working throughout the parliamentary estate? Only one Liberal Democrat Back Bencher is present, and, given that the Liberal Democrats have laid claim to significant alterations to the Bill, it is very important that they are in the Chamber.

Nigel Evans: Good try, but let us move on.

Simon Burns: I beg to move,
	That the following provisions shall apply to the Health and Social Care Bill for the purpose of supplementing the Order of 31 January 2011 (Health and Social Care Bill (Programme)):
	Re-committal
	1. The Bill shall be re-committed to the Public Bill Committee to which it previously stood committed in respect of the following Clauses and Schedules—
	(a) in Part 1, Clauses 1 to 6, 9 to 11, 19 to 24, 28 and 29 and Schedules 1 to 3;
	(b) in Part 3, Clauses 55, 56, 58, 59, 63 to 75, 100, 101, 112 to 117 and 147 and Schedules 8 and 9;
	(c) in Part 4, Clauses 149, 156, 165, 166 and 176;
	(d) in Part 5, Clauses 178 to 180 and 189 to 193 and Schedule 15;
	(e) in Part 8, Clause 242;
	(f) in Part 9, Clause 265;
	(g) in Part 11, Clauses 285 and 286;
	(h) in Part 12, Clauses 295, 297 and 298.
	2. Proceedings in the Public Bill Committee on re-committal shall (so far as not previously concluded) be brought to a conclusion on Thursday 14 July 2011.
	3. The Public Bill Committee shall have leave to sit twice on the first day it meets.
	Let me say at the outset that, because of the number of Members who wish to speak in the debate, I will take only a small number of interventions and will respond to them briefly.
	The vital importance of our national health service cannot be overstated, nor can the Government’s determination to do all in our power to make it as good as it can be for the patients who depend on it by putting patients at the centre of care and putting outcomes first—outcomes such as survival rates, speed of recovery, and the ability to lead a full and independent life. The Health and Social Care Bill represents a bold evolutionary programme of essential modernisation: a programme—[Interruption.]

Nigel Evans: Order. I know that passions are running high, but it is important that we hear the Minister.

Simon Burns: It is a programme that will end the culture of processed targets and diktats from politicians and of putting the convenience of institutions above the needs of patients.

Kevan Jones: On a point of order, Mr Deputy Speaker. I thought we were debating a programme motion, but the speech we are hearing seems to be a rehearsal of the Bill.

Simon Burns: rose—

Nigel Evans: Hold on. Keep calm. I am absolutely certain that the Minister is about to move on to the programme motion.

Simon Burns: If Opposition Members were more interested in listening than in trying to be disruptive, they would discover that after setting the scene I will deal precisely with the recommittal and our reasons for proposing it.
	We will replace that culture with a bottom-up culture of clinical leadership and patient choice and an unfaltering focus on improving health outcomes.
	While there has always been widespread agreement on the principles of modernisation—a fact that even the shadow Secretary of State now accepts—there have been concerns in some quarters that the Bill could support those principles better.

Kevin Brennan: On a point of order, Mr Deputy Speaker. Some of us wish to talk about the programme motion that we are supposed to be debating, and indeed to intervene on the Minister if he will give way, as he said that he would at the outset. Can the Minister be persuaded to discuss the motion that is before the House?

Nigel Evans: Several Members wish to participate in this very short debate. It will last for only an hour, and we are already well into that hour. Will the Minister now refer directly to the programme motion?

Simon Burns: Absolutely, Mr Deputy Speaker.
	Given our commitment to, and the paramount importance of, the NHS, we decided to take the unprecedented step of pausing at an appropriate point in the legislative process. The independent Future Forum produced its report. We shall be able to make some changes to our plans that will not require legislation, but a number of changes will need to be scrutinised again by a Committee. All our proposed changes will be subject to further detailed parliamentary scrutiny through a further Committee stage and on Report. We propose—

Several hon. Members: rose —

Simon Burns: I was about to come on to what we propose to do, but I will give way to the hon. Member for Penistone and Stocksbridge (Angela Smith), and then I will make progress.

Angela Smith: I thank the Minister for giving way.
	It is not unprecedented for Bills to come back to the House having been changed by the Government, but previously the whole Bill has gone back to Committee. Why are the Government not doing that?

Simon Burns: The hon. Lady might not be too familiar with the past. Two previous Bills have been recommitted, both in 2003, and if she will wait I will put them in the context of what we are doing.
	We propose to recommit 63 of the Bill’s clauses and to add a further five to the Bill. About 35 of those 63 clauses will need to be amended. The remainder will provide context and allow the Committee to have a sensible debate about the revisions. These clauses will cover the key areas of the Bill, including the role of the Secretary of State, clinical commissioning groups, the NHS commissioning board, the role of Monitor, foundation trusts, health and wellbeing boards and HealthWatch. We are demonstrably committed to subjecting the Bill to the full and proper scrutiny of Parliament. The Health and Social Care Bill spent a very long time in Committee, with 28 sittings over seven weeks, which, in fact, is the longest series of sittings of a Committee since we considered the modernisation of this Chamber and the House of Commons. Indeed, the hon. Member for Halton (Derek Twigg), who led for the Opposition in Committee, acknowledged at the time that the Committee had
	“scrutinised every inch of the Bill.”––[Official Report, Health and Social Care Public Bill Committee, 31 March 2011; c. 1310.]
	However—[Interruption.] However, as the changes we are making are—

Several hon. Members: rose —

Simon Burns: Earlier, Opposition Members complained that I was not discussing why the Bill was being recommitted, yet as I now go through, point by point, why we are doing that they do not seem interested in listening. As I have said, I will not accept interventions frequently, because the House wants to know what we are doing and why are doing it, and that is the right way to proceed.

Several hon. Members: rose —

Simon Burns: I will give way once more, to the hon. Member for St Helens North (Mr Watts), and then I will make progress.

Dave Watts: I thank the Minister for giving way.
	So far today, the Minister has used the precedent of 1983. Will he confirm that when a similar Bill came back in 1983, the whole Bill was recommitted to the House?

Simon Burns: The hon. Gentleman seems a little confused. He is talking about 1983, but if he had been listening he would know that I have already said that two Bills were recommitted in 2003. I also said that if Opposition Members wait, I will explain the context of those Bills vis-à-vis the current situation. I therefore urge them to show patience, as they will then learn something.

Kevin Brennan: On a point of order, Mr Deputy Speaker. In fact, the last Bill to be partially recommitted to a Committee was the Mineral Workings Bill in 1951, some 60 years ago, but the Minister is not referring to that.

Nigel Evans: That is just an extension of the debate. I reiterate that we have only one hour to debate this programme motion, so may we make progress? May I also ask Members to calm down, because I am finding it difficult to listen to the Minister?

Simon Burns: Thank you, Mr Deputy Speaker, and you can rest assured that I am doing my bit. If only Opposition Members would listen, they would get the plot.
	As the changes we are making are substantial and significant, we have decided to recommit relevant parts of the Bill to Committee. I can tell the House that we expect to make around 160 amendments to the Bill, which we will table in good time. We will also go further and publish briefing notes to help explain the amendments to parliamentarians and those who follow our proceedings outside.

Emily Thornberry: When?

Simon Burns: The hon. Lady, from a sedentary position, rather like a Greek chorus that ill-befits her, asks when. The answer is that we expect to table the amendments by 23 June, which, if it helps her, is in two days’ time. That is despite the fact that many previous Bills—[ Interruption. ] The hon. Member for Islington South and Finsbury (Emily Thornberry) should listen to this because it has some direct relevance that she will not like. We are doing this despite the fact that many previous Bills were not recommitted under the previous Government despite their having undergone significant change. For example, the Local Government and Public Involvement in Health Bill in 2007 had 54 new clauses and three new schedules added by Government amendment, but rather than returning it to Committee the previous Government added them on Report. The Planning Bill of 2007-08 had 29 new clauses and three new schedules added by Government amendment; again, rather than return that Bill to Committee, the previous Government added the clauses on Report. Indeed, a Bill has not been recommitted for eight years since the Planning and Compulsory Purchase Bill in 2003.
	No fair-minded person can claim that we are not subjecting the Bill to the closest possible scrutiny. Our recommitting the Bill will give hon. Members additional time to examine parts of the Bill that the Government propose to change. Of course, hon. Members will have further opportunity to scrutinise the entire Bill on Report in the Commons and the Bill will receive full scrutiny in another place. We do not believe that it is necessary for the entire Bill to be recommitted—[Hon. Members: “Why not?”] If hon. Members will listen they will find out why not. We do not believe that it is necessary for the entire Bill to be recommitted in order for proper scrutiny to take place. Indeed, we feel very strongly that that would unnecessarily delay the progress of the Bill to the ultimate detriment of patients. It is now time to give greater clarity and direction to staff and patients. As Professor Steve Field said in the Future Forum report:
	“It is time for the pause to end.”
	Professor Field is not alone in the opinion that now is the time to move forward and to enable proper and thorough scrutiny of those parts of the Bill that will
	change but without delaying the Bill’s passage beyond what is absolutely necessary. The Academy of Medical Royal Colleges said in its response to the Future Forum report:
	“We hope the Government will now accept the Future Forum’s recommendations in full and move swiftly to make the changes to the Bill and the proposals that are required”.
	The King’s Fund has also emphasised the need to avoid unnecessary delay. It said:
	“The ‘pause’ has served the NHS, its staff and patients well”—

Ian Lucas: On a point of order, Mr Deputy Speaker. I tabled a named day question to the Minister, of which he is aware, in which he made it very clear that the changes to the Bill that he says relate to the recommendations of the Future Forum were in fact—

Nigel Evans: Order. Please resume your seat. That is not a matter for the Chair; it is an extension of the debate. Yet again I reiterate that we are now 13 minutes into a one-hour debate and we have yet to hear from the shadow Minister and a number of Back Benchers who wish to participate, so, please, could we restrain bogus points of order—that is No. 1 —and could we also have more quiet?

Simon Burns: As I was saying, although the pause may have ended, we will never stop listening. [ Laughter. ] That is why a team of top health experts will continue to provide independent advice to the Government. [ Interruption. ]It is extraordinary, Mr Deputy Speaker, that hon. Members giggle and scream hysterically when they do not like what they hear. What they will not accept is that we did listen through the independent forum—we listened, we strengthened the Bill and they do not like it that more people and more organisations outside the House now believe that the plans that my right hon. Friend the Secretary of State introduced have been strengthened and will meet the needs of a modernised health service. That is the problem. That is why they are behaving in that way.
	Of course, we need to give right hon. and hon. Members ample opportunity to examine the amendments in detail, but unnecessary delays will only cause harm for patients and add to the pressure on hospitals and commissioners as they make their modernisation plans. They will prevent clinicians on the ground from making the changes they believe will help to improve and save people’s lives. That is why we can have proper scrutiny through the recommittal of the parts of the Bill we are changing, as outlined in the motion, and I urge my hon. Friends and the House to accept it.

John Healey: Last week, we had a political fix on the Government’s health Bill. This week, we have a procedural fix. The way the Government are dealing with the national health service and with the House of Commons is a disgrace. Last week, the Prime Minister was forced to backtrack in some areas to buy off the many critics of his health plans. This week, to head off proper parliamentary scrutiny of his plans, he refuses to put the whole Bill back into Committee.
	The changes announced last week to the Prime Minister’s NHS changes are not a proper plan for improving patient care, or for a better or more efficient NHS. Those aims could largely be met without legislation, and certainly without the huge risk and cost of the biggest reorganisation in NHS history. The big quality and efficiency challenges the NHS must meet for the future will be made harder, not easier, by the reorganisation and the announcements last week.
	The NHS has seen a wasted year of chaos, confusion and incompetence from the Government. Today, it is clear from the motion that that will continue. The motion signals the onset of sclerosis in the health service. The Bill will mean that the NHS is deeply mired in more centralisation, more complex bureaucracy and more wasted cost in the years to come. There will be five new national quangos and five new local bodies doing the job that one—the primary care trust—does at present.
	Today, the motion signals that the essential elements of the Tories’ long-term plan to see the NHS broken up as a national service and set up as a full-scale market are still intact.

John Pugh: Regardless of the merits of the Bill, does the right hon. Gentleman accept that what the NHS and the public want is to find out whether the House supports it? They do not want to prolong the agony.

John Healey: What the public and patients want is to get to the bottom of the changes the Government said they were bringing in. They want us to do our proper job of scrutinising the detail, and for that we need the time to do so, with the full Bill recommitted to the Public Bill Committee. Even some of the hon. Gentleman’s Lib Dem colleagues are beginning to see through this. Yesterday, the hon. Member for St Ives (Andrew George) wrote that the Government
	“leaves many of the previous concerns—about the risk of a marketised NHS, a missed opportunity to better streamline health and social care and a lack of accountability—still unresolved.”

John Pugh: But does the right hon. Gentleman accept that those concerns will all be covered in the areas of the Bill to be discussed? Nothing will be left out.

John Healey: I do not normally quote the hon. Gentleman’s party leader, but a few weeks ago, the Deputy Prime Minister said:
	“It is very important that MPs, who represent millions of patients up and down the country, have the opportunity to really look at the details that we are proposing…I have always said that it is best to take our time to get it right rather than move too fast and risk getting the details wrong.”
	The Prime Minister has stopped listening to the Deputy Prime Minister, and that is exactly the mistake the Government are making with the motion.

Grahame Morris: Does my right hon. Friend agree that despite the Conservatives saying that they are against cherry-picking, that is exactly what they are doing? They are cherry-picking the elements to be referred to the Bill Committee. Clause 60, for example, which deals with Monitor and the regulation of the NHS, is not included. There are so many inconsistencies in the Bill.

John Healey: One of the deep flaws in the motion is that it is hard to see how the Committee can properly consider the changes that the Government say they want to make without being able to consider the consequences for other parts of the Bill and other parts of the NHS.

Andrew Percy: Moderation in these debates is always to be welcomed. Surely the right hon. Gentleman must see that he cannot have it both ways. He cannot complain about the money and the length of time spent on the listening exercise. When I was in the House last week to listen to the statement, he said it was time to get on and get it done, yet he argues that we should drag the process out for even longer. He cannot have it both ways.

John Healey: I can and I have. This is a reckless and needless reorganisation, which has led to confusion and chaos over the past year. If the House does not help to get the legislation right by doing its proper job, that chaos and confusion and the wasted cost—money that should be spent on patient care—will continue.

Kevin Brennan: Is it not an abuse to use this procedure, which is very rare? According to the Library, the most recent example of a partial recommittal of a Bill to the same Committee was the Mineral Workings Bill in 1951 because of an inadvertent error in the original Committee stage. It is totally wrong to use the procedure. The whole Bill should be recommitted.

John Healey: My hon. Friend has a point. What is wrong is a partial recommittal of the Bill, because the Bill requires full scrutiny of the full provisions with the changes that the Government propose to make, once we have had a chance to see them.
	The Health Minister and Government Members urge us to go faster. Everything this Government have done with their NHS reorganisation has been rushed and reckless, and the motion signals that they are set to repeat the mistake by railroading the Bill through at breakneck speed and denying this elected House its proper role in scrutinising the legislation. Labour tabled a motion a month ago for the full Bill to be reconsidered in Committee, for more time to look at the detail of the amendments and for proper scrutiny and debate in Committee.

Ian Lucas: Is it not important to take into account the written answer that I received to the named day question—a very good question—that I put to the Minister? He gave me a very good answer: far from recommittal being a consequence of the NHS Future Forum, the Government were consulting on these very amendments to the Bill prior to the announcement that they made on the consequences of the Future Forum. Is not the entire process a sham?

John Healey: My hon. Friend is right. We know that the Prime Minister is a PR man. We know that he was forced to call the pause and that, when he did, he was looking for a PR solution. The answer that my hon. Friend flushed out of the Government stands that up clearly.
	To return to the motion before the House and the question whether the Bill requires, as we argue, recommittal in full, parliamentary precedent demands this, proper parliamentary scrutiny demands this and, above all, our responsibility to NHS patients to try to get the legislation right demands this. The parliamentary precedent is clear, as my hon. Friend the Member for Cardiff West (Kevin Brennan) said. The House of Commons Library tells me that the last time a Bill was recommitted in part was 60 years ago. In response to a point of order, the Health Minister cited the Planning and Compulsory Purchase Bill of 2003 as a precedent. The Labour Government recommitted that Bill in full and gave Committee members the whole of the summer recess to examine the detailed amendments before the Committee sat again. Why are the Government not acting as they should and as Labour acted in government with that Bill?
	The NHS, the legislation and the changes to the changes announced last week are all complex, and the House cannot do its proper job unless the Government’s changes to one clause can be considered alongside the consequences for other parts of the Bill and for the health service. How can the promised changes to Monitor’s role be considered without looking at all 29 clauses dealing with its licensing powers? The House cannot do its proper job unless all the areas that the Government say they will change are recommitted.
	Why are the clauses on the failure and designation regime for hospitals, which the Government say they will change, not covered in the recommittal motion? The House cannot do its proper job, and organisations cannot give proper evidence to the Bill Committee, unless all the amendments are tabled in good time, so why will there be only two full working days between the tabling of amendments and the Committee sitting? The House cannot do its proper job unless the Bill Committee has sufficient time for scrutiny.
	The 64 clauses in the recommittal motion took 45 hours of debate in Committee last time. The Government are now cutting that time in half. The Minister said that he expects 160 amendments in Committee. That allows less than 10 minutes for each amendment that the Government table, and that is before the Opposition table our own amendments and before taking into account the six schedules that are being recommitted.

Simon Burns: As a former Minister, the right hon. Gentleman knows about taking legislation through Committee. Given that a number of the 160 amendments will be technical and drafting amendments, will he please tell the House how many minutes he needs for each technical and drafting amendment to be debated in Committee?

John Healey: The Minister, his colleagues and the Prime Minister have broken their word so often so far on the NHS that we cannot take at face value what the Minister says. We will wait to see and we will judge what he does when we see the detail of the amendments that he tables.

Dave Watts: Does not this go to the root cause of the way the Government are dealing with the NHS? They are dealing with it piecemeal.
	At present we have an integrated health service. Does not their approach show that they want to break that NHS up?

John Healey: My hon. Friend is right. What the Government are doing is reckless and rushed. The NHS is still intact, but what they are doing will break it up as a national service, as we know it.

Several hon. Members: rose —

John Healey: I give way for the last time to the hon. Member for Strangford (Jim Shannon).

Jim Shannon: The Committee had 28 meetings, 100 Divisions and hour upon hour of debate. That has been reflected in public opinion. The electorate who put us all in the House to represent their views are clear about what they want: a full debate in Committee, not a short-term Committee. They want it to sit until 18 October, not until 14 July.

John Healey: The hon. Gentleman served on the Public Bill Committee. I hope he will continue to serve when the Bill is recommitted. He is right. The public and NHS patients expect us to do our best to get the legislation right. To do that, we require the detail, we require the time, and we require the whole Bill to be recommitted.
	The House cannot do its proper job without an impact assessment. The current assessment says that
	“the full benefits of these changes will not be realised unless there is a change to regulation to promote competition”.
	The Government now say that this policy will be altered. There will also be greater bureaucracy, longer time scales and more bodies with more complex accountabilities. Both the supposed benefits and the stated costs have changed, yet the Government tell us that the new impact assessment will not be published until the Bill reaches the Lords.
	How much will this reorganisation now cost? How much can the Government now claim this will save? What are the risks? Why has the Health Secretary being blocking my freedom of information requests to release the official risk register since November? Why will the Government not welcome and allow full scrutiny of the Bill in view of the significant policy changes they say they are making? Why are they preventing this elected House from doing its proper job of fully scrutinising the legislation?
	If the programme motion is passed, more will need to be done on Report in this House and during the Bill’s passage through the other place. We will continue to oppose this reckless and needless NHS reorganisation, lead the detailed scrutiny this legislation requires and speak up as patients start to see their NHS services suffer again under the Tories. We will oppose the motion.

Several hon. Members: rose —

Nigel Evans: Order. Many Members wish to participate and there is only half an hour left, so long speeches would not be appropriate, to be fair to Back Benchers.

John Pugh: I will briefly specify three linked reasons, good and bad, why we support the Government’s programme motion. We oppose the Opposition’s amendment to the motion because it would simply lead to unnecessary delay. The Government have identified through the listening exercise, perhaps belatedly, the controversial, difficult and unworkable aspects of the legislation and want to change them. In deference to the people they have consulted, they want to change those aspects promptly and subject them to proper scrutiny, not only in Committee, but in an evidence session that we will also have.
	Surprisingly, many areas of the Bill are relatively uncontentious and ought not to detain the House a great deal longer, such as the aspects relating to social work, the health and care professions or the National Institute for Health and Clinical Excellence. Those areas are relatively uncontentious and need not be massively reconsidered. In addition, there is the summer recess, as the right hon. Member for Wentworth and Dearne (John Healey) said, which means that after the Committee has concluded its considerations there will be ample time for him and anyone in the NHS, including all the consultees, to make adequate representations. The Bill will then go to the Lords and return for our further consideration.

Bill Esterson: The hon. Gentleman will have been lobbied by constituents in the same way that I and other Members have been. Does he agree that the public’s real concern is the potential for cherry-picking by private companies, even with the amendments that are being made, and that this approach will be unable to stop such a process?

John Pugh: The public are perfectly entitled to an answer on whether the Bill contains cherry-picking or not, but it is better that they have that answer sooner rather than later. There is a second reason—[ Interruption. ] May I just set my stall out? The second reason why this must be done properly is that the Bill has so far led to uncertainty and the implosion of primary care trusts. Whoever’s fault it is—[ Interruption. ] People will know that I did not support the original Bill. It has led de facto to the implosion of PCTs and to some irregular adjustments and appointments being made on the hoof—Members can ask their constituents about that—and to some premature arrangements being made.

Karl Turner: I am obliged to the hon. Gentleman for giving way. How many times did he support my colleagues and I in the Bill Committee?

Several hon. Members: None.

John Pugh: None is not the correct answer. The issue that Labour Members need to understand is that the NHS, as a result of the Budget that most of them voted for in 2010, needs to find £20 billion, and we cannot do that unless—[ Interruption. ] If it is a disgrace, it is a disgrace that the Labour party inflicted on us. We cannot do that against a background of complete and utter uncertainty, not knowing who will be running the NHS and having to find those savings. Members can
	check for themselves, but that is the view of the local people running their hospitals. Regardless of the merits of the legislation, they now want a decision.

Angela Smith: Given that the hon. Gentleman voted for the Bill on Second Reading and got that wrong, how can we be confident that he has got it right today?

John Pugh: If the hon. Lady checks Hansard , she will find that I did not vote for the Bill on Second Reading––okay?
	A third and more consensual reason—I might now withdraw it—is that I can assure the House that, having served on the Bill Committee, it could not find a better or more informed set of individuals who are on the ball. The Opposition drilled down on every clause with laser-like precision. There are some very talented individuals sitting on the Opposition Benches, and there is still that galaxy of informed talent. They might feel, as I do, that it is a little like being sent back to the trenches, but the fact is that if that team cannot win the arguments for either accepting or rejecting these changes in the time allotted, frankly there is no hope for this House. They must approach the matter in the right spirit, although that seems somewhat in doubt. I urge Opposition Members to have confidence in their team, the timetable and the ability of the British public to judge if it all goes horribly wrong, but it will not go horribly wrong simply because of the programme motion.

Chris Bryant: The problem with what the Government are presenting this evening is that, having had a pause, they have decided to fast forward without the intervening period. The truth of the matter is that they will not inspire confidence in the running of the NHS by moving at a gallop and they will not improve morale by moving at such speed without proper scrutiny. I must say to Government Members that last night’s business motion, which stated that no amendments could even be moved today, was an absolute disgrace. What are they frightened of?

Peter Bone: Will the hon. Gentleman give way?

Chris Bryant: In a moment.
	Are the Government frightened that some of their Back Benchers might vote for an amendment? I can assure them that there are very few courageous people on their side of the House, but the hon. Member for Wellingborough (Mr Bone) is one of them.

Peter Bone: I agree with the sentiments that the hon. Gentleman is expressing, but could he explain to me why the official Opposition did not object last night?

Chris Bryant: Because there was no opportunity to have a debate last night. It would have been nice to be able to expose the problems with the way the Government are dealing with the Bill, but unfortunately such an opportunity was unavailable to us. It is a disgrace that there is no opportunity for amendment. It is also a disgrace that the whole Bill is not being recommitted. We have seen none of the amendments. The Government are basically saying, “We’ve decided where we want to
	change the Bill, and only those bits shall be available for discussion by the Committee.” That is a completely inappropriate abrogation of the powers of this House to the Crown. The person who should be most disgraced by that is the Deputy Leader of the House, because he has said so many times that he believes in better scrutiny and yet is now abandoning that.

David Heath: Will the hon. Gentleman give way?

Chris Bryant: I will not give way. If he had allowed more—[ Interruption. ]

Lindsay Hoyle: Order. There is very little time as it is, and screaming at each other does not help.

Chris Bryant: If the Deputy Leader of the House had allowed more than an hour for debate today, I would give way to him, but I am not going to give way now. We have already heard from a Minister for 15 minutes.
	It is a bizarre selection of clauses that the Committee will be allowed to discuss. For instance, it will not be allowed to discuss clause 239 on NICE’s charter, nor clause 240 on its functions, but it will be allowed to consider clause 242, on the failure of NICE to discharge its functions. There is absolutely no logic to what is being presented to us.
	In addition, the programme motion does not allow enough time. The Prime Minister is profoundly confused about all this, because he said many times this morning that 10 days would be allowed. Indeed, he said:
	“Ten days… I don’t want to sort of misquote the Monty Python sketch but when we were in opposition we used to dream of tens days to debate a government bill”.
	Well, yes, we are dreaming of 10 days now. We would love to have 10 days, but there will not be 10 days; there will be 10 sittings.

Kevan Jones: The Prime Minister is not very good on detail, because the Criminal Justice Bill to which he referred, and whose Committee he sat on, actually had 38 sittings over eight weeks.

Chris Bryant: My hon. Friend is absolutely right, but surely the key point is that we need to do this scrutiny properly. The Government may think that they are doing themselves a favour by trying to get the Bill out of this House by the summer recess, but all it means is that those in another place will have to do a proper job of scrutiny, and I bet that they will not get it out of the second Chamber before next year.
	Finally, the motion states that we have to commit the Bill to the same set of people. Now, some splendid people sat on the Government Benches in that Committee, including the hon. Member for Preseli Pembrokeshire (Stephen Crabb). He is a splendid Member of Parliament whose integrity I do not want to be questioned, but he will now have to force all the people whom he forced previously to vote for one set of proposals in the Bill to
	vote for exactly the opposite. I therefore beg Government Members, if they value the hon. Gentleman’s career, to vote against the motion.
	I say that because, theoretically, the Committee Chairman could rule that some amendments cannot be taken or selected because we have already presented them and the same Committee is re-sitting. We will find, however, that many Government Members have to stand on their heads and vote for the exact opposite of what they voted for earlier.
	I understand that one of the great passions in life of the hon. Member for Southport (John Pugh), who speaks for the Liberal Democrats, is weight-lifting. Well, he did no heavy lifting of any kind on the previous Committee, and if there are changes to the Bill they are the work of Opposition Members, not the hon. Gentleman. He said that it was a wonderful Committee and could not have been better. Well, why was the hon. Member for Totnes (Dr Wollaston)—somebody who knows about general practice—not put on it? Of course, we know the reason: she did not agree with the Government.
	I do not believe that the new Committee should include the same set of people, in particular because the hon. Member for Stafford (Jeremy Lefroy), on the final day in Committee, asked the Minister one of his great insightful questions: “What is the point of clause 249?” He is clearly a man of insight. In addition, he later said:
	“I am still a member of the Committee, I think.”––[Official Report, Health and Social Care Public Bill Committee, 31 March 2011; c. 1268.]
	We should have a new set of Committee members. There is no point in every Member who sat on the previous Committee, including those with direct financial interests in the Bill, being on the Committee in future, so I say, “Vote against this ludicrous, shameful and disgraceful programme motion.”

Peter Bone: It is always a pleasure to follow the hon. Member for Rhondda (Chris Bryant). He is a parliamentarian before anything else, and he made some very important points, which we must consider.
	The House must make up its mind whether to vote for a programme motion. I start from the position that I should always vote against a programme motion, because they are a Labour party invention and not good for scrutiny, so I gently say to the hon. Gentleman that, when I sat where he now sits, the Government whom he supported railroaded Bills through without proper scrutiny on many occasions. He was personally against that, but it happened, and whole rafts of Bills were not scrutinised.
	On procedure, I congratulate the Secretary of State for Health and the whole Government on something that some Opposition Members do not understand but parliamentarians on both sides of the House will. We have a new Parliament and a new way of doing business. The Government no longer make their mind up and railroad through a Bill—[ Interruption. ] Some people laugh and scoff, but they are the people who do not get it. This Parliament is about scrutiny, and it has been proved that this Parliament can do it. People talk about U-turns, but this is not a U-turn; this is parliamentary scrutiny, and it is an amazing improvement on the previous Parliament.

Kevin Brennan: Does the hon. Gentleman think it right in principle that the Government should be able to choose the parts of the Bill in Committee to which Members from any party, Front Benchers or Back Benchers, might want to introduce amendments?

Peter Bone: The hon. Gentleman makes a really important point, one that I am wrestling with before I decide how to vote. If we had a business of the House committee, that problem would not arise, because the decision would be made in public and not by the Executive, but we are where we are. To the Government’s credit they avoided Standing Orders by allowing us to have a debate—however short—today. Standing Orders called for this motion to be decided forthwith and without a debate, so the Government should get credit for that.
	There are a number of issues, but an important one is whether the whole Bill should be recommitted. I can see many arguments for that, but I can see also an alternative view, which says, “You’re going to look in more detail and have more time if you look at provisions that have effectively been changed.”
	The Government talk about moving 160 amendments, and the Opposition will move amendments, but I hope that in Committee Back Benchers will do so, too. The problem for the Committee’s Chairmen is that they will have to consider how to deal with those amendments that are approved and consequential to earlier parts of the Bill, but I think that they will do so sensibly.
	I have some doubts about the same people being on the Committee. I volunteered to sit on it and wrote to the Chairman of the Committee of Selection. There is an argument for fresh faces on the Committee, but the really important point is how Members on both sides behave in Committee. If they go there to scrutinise the Bill, if they are willing to table sensible amendments and if they vote according to their conscience and not on party lines, we will have real scrutiny.

Angela Smith: I appreciate what the hon. Gentleman says, but under the programme motion the Bill has to be completed by 14 July, meaning a maximum of 12 sittings. How can that possibly be adequate time to scrutinise the changes being brought forward?

Peter Bone: The hon. Lady asks another important question on which we as parliamentarians have to decide today. As I have said, I am against programme motions that include end dates; I am against programme motions anyway. We could recommit the Bill without including a timetable on when it must leave Committee, but unfortunately we live in this world and that tactic was invented not by my right hon. and hon. Friends on the Treasury Bench, but by the previous Government—[ Interruption. ] The hon. Member for West Ham (Lyn Brown), the Opposition Whip, who of course did not actually say anything, makes the point that two wrongs do not make a right, and I agree.
	I know other Members want to speak, but I wish to return to my previous point. If Committee members, at least those on the Government side, vote according to their conscience and are not whipped, we will have a much better Bill. Of course, that is what the Prime Minister said in his famous speech on 26 May 2009, but I encourage such behaviour, because, if the Government
	do not like any amendments that are carried, they can always reverse them when the Bill returns to the House on Report.

Dave Watts: Does the hon. Gentleman really believe that his own Whips are going to stand aside regarding this Bill? Frankly, he is living in a dream world if he thinks they are going to choose people who will not toe the party line and will vote for every amendment that they want.

Peter Bone: If I am put on the Committee, I shall certainly make up my own mind. I know that that concept is foreign to Labour Members, who have always done what they are told and voted how they are told. Conservative Members are different—we vote according to conscience.

Owen Smith: As a member of the Committee, I point out to the hon. Gentleman that throughout all 38 sittings I watched Conservative Members dragooned by the Whips and not once voting according to their conscience, if they have one, but with their Front Benchers.

Peter Bone: I am afraid that I did not serve on the Committee, and my bid to get on it still stands. I hope that this new-found way of doing business will eventually make progress. If this House is ready to take back control of business, that is the way it has to be.
	I welcome what the Government have done throughout this whole process, and I welcome today’s debate. I have reservations about the programme motion, and I will make up my mind on how to vote at the end of the debate. When the Bill comes back to the House on Report, I hope that there will be enough time for Members to deal with all the amendments and new clauses, because at the moment only members of the Committee can do so. In general terms, I welcome the new process and congratulate the Secretary of State for Health.

Kevan Jones: I rise to oppose the programme motion. I remember sitting and listening to some eloquent speeches against programme motions by Conservative Members when we were in government. What we uniquely have tonight, as has been highlighted by my hon. Friend the Member for Rhondda (Chris Bryant), is a double programme motion, because this debate is being limited to one hour, and then we will have a programme motion that rushes the Bill through by 14 July. Another unique aspect is that this is the first time since the coalition Government came into being that a Conservative Member has opened the debate following a major U-turn or embarrassment, when a Liberal Democrat is usually put up as a human shield. On this occasion, the Minister has obviously fallen for the trick.
	It is important that this Bill gets proper scrutiny, but that will be difficult. The Minister has already said that the Government are going to table 160 amendments, and that is before any others have been proposed. He said that some would be technical, and I accept that, but we do not know what they will be about or how many there will be.

Helen Jones: Does my hon. Friend agree that it is disgraceful that we are not even seeing those amendments until two days before the Bill goes into Committee, giving outside organisations and members of the Committee no time to scrutinise them? Does that not show that the Government are running scared of proper scrutiny?

Kevan Jones: My hon. Friend makes a good point. One innovation is the introduction of pre-legislative scrutiny of Bills by a Committee. In 2001, I served on one of the very first such Committees, which considered the Civil Contingencies Bill. That was an extremely good process during which the then Government accepted well over 100 recommendations and amendments. With a timetable of 10 sittings—not 10 days, as the Prime Minister said today—there will be very little time for outside bodies to scrutinise and have professional input into the Government’s amendments.
	The hon. Member for Southport (John Pugh), who speaks for the Liberal Democrats, says that we cannot prolong the agony or uncertainty faced by the health service. I remind him that we are in this position because his party is supporting the back-of-a-fag packet proposals dreamed up by the Secretary of State for Health. If he really wants to be able to say that he has made a difference, he should have voted with the Opposition when he had the opportunity. It is interesting that he is again the sole Liberal Democrat on the Government Benches, even though we are being told that it is the Liberal Democrats who have made major changes to the Bill.
	If the Bill is to get proper scrutiny, if we in this place are to get the respect of electors in thinking that we are doing a proper job of scrutiny and, more importantly, if we are going to get the health service that this country deserves, this is not the way to do it. I predict that we will get to 14 July, when most of the amendments will not have been debated, and once again let the other place dismember the legislation. We can see the job it is doing up there at the moment, and that is because ill-thought-out and ill-prepared Bills are being brought forward by this coalition Government.

Andrew Percy: I did not intend to speak, but I have been provoked into making a few brief comments. Like my hon. Friend the Member for Wellingborough (Mr Bone), I have concerns about programme motions, despite having been here only a short time. I, too, have never been successfully placed on a Bill Committee, although his failure is perhaps greater than mine as he has been here a bit longer than I have.
	Before I was elected to this place, I spent 10 years as a local government councillor in perpetual opposition, being one of only two Conservative councillors on an authority of 60 members. We spent all that time criticising the administration for not listening to us and not giving us the opportunity to scrutinise decisions correctly. Perhaps it is the role of an Opposition to make a great deal of noise about the issue of scrutiny, and I understand that that is partly the approach of Labour Members today.
	Since being elected, I have been incredibly frustrated by how little time there is to debate anything. Everything seems to be time-limited, and one sometimes sits for
	hours and cannot get called. I hope that if anything comes out of these discussions, this issue will be looked at in future years and we will have a different way of doing things in this place so there is proper debate.
	When I talk to members of the public and health professionals, they tell me that they want clarity in knowing where we are heading with the NHS. Having listened to the Secretary of State, I want to know what the provisions will be to prevent cherry-picking.

Andrew Gwynne: Does the hon. Gentleman not understand that recommitting only the parts of the Bill that the Government want to recommit, and not considering the knock-on impact on other parts of it, will create uncertainty about the aspects that are not going to be debated?

Andrew Percy: I take the hon. Gentleman’s point. That has already been discussed. The key thing now is to debate the parts of the Bill that the Government have said they intend to amend, and perhaps that will mean that we can debate them in more depth. I want to know what the provisions are going to be to prevent cherry-picking. The shadow Secretary of State said that this is an attempt by the Government to break up the NHS and bring in market forces. I would not want to be a member of any political party that attempted to do that, so I want to know about the Government amendments.

Kevin Brennan: I respect the hon. Gentleman’s respect for Parliament and therefore put to him what I said earlier: on a point of principle, is it not wrong that the Government should be able to select the parts of the Bill that they want to have scrutinised and not allow Members from all parts of the House an opportunity to do so? Does that not set an extremely dangerous precedent?

Andrew Percy: We have discussed where these procedures come from and who is accountable for them, and that certainly cannot be laid at the door of this Government. Over the past few months, we have heard first that there has been too much delay, and now that there is not enough delay.
	As we have heard, professionals in the health service and the public have been saying that they wanted to know where we were heading and that they needed some clarity. The Government wanted that brought to an end, and they have had their listening exercise. On that basis alone, although I do not like the idea of curtailing debate, I hope that we can get on with this so that we all know what the changes are going to be, and that we end up with an NHS that is on a stable footing for the long term and do not have any more reorganisation for a considerable time.

Lindsay Hoyle: Grahame Morris with about four seconds.

Grahame Morris: I am very grateful, Mr Deputy Speaker. I call for the motion to be opposed.

Kevin Brennan: I just reiterate the point that 1951 is the last time that this exact procedure was used. The Government are setting a dangerous precedent. This is an abuse of parliamentary procedure and it does not enable the House to consider all parts of the Bill. The recommittal of Bills is quite a rare procedure in this House.
	One hour having elapsed since the commencement of proceedings on the motion, the Deputy Speaker put the Question (Order, 20 June).
	The House divided:

Ayes 297, Noes 224.

Question accordingly agreed to.
	Ordered,
	That the following provisions shall apply to the Health and Social Care Bill for the purpose of supplementing the Order of 31 January 2011 (Health and Social Care Bill (Programme)):
	Re-committal
	1. The Bill shall be re-committed to the Public Bill Committee to which it previously stood committed in respect of the following Clauses and Schedules—
	(a) in Part 1, Clauses 1 to 6, 9 to 11, 19 to 24, 28 and 29 and Schedules 1 to 3;
	(b) in Part 3, Clauses 55, 56, 58, 59, 63 to 75, 100, 101, 112 to 117 and 147 and Schedules 8 and 9;
	(c) in Part 4, Clauses 149, 156, 165, 166 and 176;
	(d) in Part 5, Clauses 178 to 180 and 189 to 193 and Schedule 15;
	(e) in Part 8, Clause 242;
	(f) in Part 9, Clause 265;
	(g) in Part 11, Clauses 285 and 286;
	(h) in Part 12, Clauses 295, 297 and 298.
	2. Proceedings in the Public Bill Committee on re-committal shall (so far as not previously concluded) be brought to a conclusion on Thursday 14 July 2011.
	3. The Public Bill Committee shall have leave to sit twice on the first day it meets.

Scotland Bill (Programme) (No. 2)

David Mundell: I beg to move,
	That the Order of 27 January 2011 (Scotland Bill (Programme)) be varied as follows:
	1. Paragraphs 6 and 7 of the Order shall be omitted.
	2. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on the day on which those proceedings are commenced.
	3. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion one hour after the moment of interruption on that day, or one hour after they are commenced, whichever is the earlier.
	I wish to speak briefly to the programme motion, so as to allow Report to begin. As Members will see, the Government are amending the programme order to allow Report stage to run until 10 pm and Third Reading to conclude one hour after that. Members will be aware that the Health and Social Care Bill was recommitted today, and that one hour was agreed to for that debate. That has resulted in a shift in today’s business. The Government believe that it is important that the Scotland Bill receives an appropriate amount of time for debate on Report, which is why we are allowing for proceedings on Report to continue until 10 pm, and for Third Reading to conclude at 11 pm.
	I am aware that the hon. Member for Dundee East (Stewart Hosie) raised concerns in the Chamber yesterday about the amount of time available to debate the remaining stages of the Bill. The programme motion will extend time for debate on the Bill, and I hope that it will allay his concerns. I look forward to consideration of amendments on Report, and to the debate that the Bill will receive on Third Reading.

Tom Greatrex: I welcome the opportunity to debate the Scotland Bill yet again. For many of us it has been a long process since the formation of the Calman commission in late 2007, and there has been detailed consideration of a number of the measures in the Bill.
	However, as I am sure the Minister would acknowledge, the Government have tabled significant and important new clauses that were not part of the Calman process and were not available to us in Committee. As I recall, they were not ready by the time of our debates in Committee. A number of amendments have also been tabled by the Opposition Front Benchers and by other Members on both sides of the House, including nationalist Members, and we are keen to have them debated this evening.
	I understand the Minister’s point about the additional hour that is being provided to compensate for the debate on the recommittal of the Health and Social Care Bill, but there was an hour’s debate on that motion plus the time for the vote. It followed the Government’s customary U-turn statement, which today was on sentencing. I note that that lasted almost exactly 90 minutes, and although I am sure the Justice Secretary enjoyed those 90 minutes of his time, it means that there is less time for us to debate important aspects of this constitutional Bill. The Minister and his colleague the Secretary of
	State have made great play of the significance of the Bill, for instance in the fiscal changes that it encompasses, the additional powers that it devolves to the Scottish Parliament and the reassignment of powers at UK level.
	I understand, of course, that by speaking to the programme motion I am effectively reducing the time available for debate on the substance of the Bill, but I wish to register the point that we are aware that significant parts of the Bill have yet to be debated in any meaningful way. They include issues that we did not reach in Committee, which are back on the agenda today. As the Minister said, it is important that we have the appropriate amount of time to debate them this evening. Given the time that we have left, I am not sure that will be the case.
	I am sure the Minister would like us to deal with the Bill properly, given the amount of further scrutiny that there will be in the Scottish Parliament, and that he wants us to have the appropriate time to debate the issues in question. I am not sure we will have enough time this evening, although we will endeavour to get through as much as possible. It is important that some of the amendments are dealt with in depth and detail, and I am not sure that the motion affords us that opportunity.

Pete Wishart: I do not know what planet the Minister is living on if he thinks that three hours is enough to discuss the remaining stages of a Bill that he has described as the most significant transfer of powers since the onset of the Scottish Parliament. It is totally unsatisfactory. We have something like 26 amendments and 11 new clauses to discuss, on issues as important as the tax powers of the Scottish Parliament, corporation tax, excise duty, the devolution of legal powers and authorities and the composition of the Scottish Parliament. Each of those deserves a full day’s debate, yet we must try to shoehorn all that into approximately three hours. We have heard a lot about the respect agenda, which is a much abused and misused term, but surely it is the height of disrespect to try to shoehorn all those important matters into such a short time.
	If the House does not care about Scotland, it will be no surprise if Scotland does not care about the House. There is a lack of time for debate. I will not divide the House because I want to get on in the time available to try to discuss the important measures. I simply register our deep unhappiness and dissatisfaction about the lack of time that we have been left to debate an important Bill.
	Question put and agreed to.

Scotland Bill

[Relevant document: The Fourth Report from the Scottish Affairs Committee, The Scotland Bill, HC 775-I.]
	Consideration of Bill, as amended in the Committee.

New Clause 5
	 — 
	Definition of Scottish taxpayer for Scottish variable rate

‘(1) In Part 4 of the 1998 Act (power to vary income tax rate), for subsections (1) to (6) of section 75 (Scottish taxpayers) substitute—
	“ Sections 80D to 80F (definition of Scottish taxpayer) apply for the purposes of this Part.”
	(2) This section ceases to have effect at the end of the last year for which Part 4 has effect (see section 26(2) and (4)).’.— (Mr Gauke.)
	Brought up, and read the First time.

David Gauke: I beg to move, That the clause be read a Second time.

Lindsay Hoyle: With this it will be convenient to discuss the following: new clause 8 —Funding formula for Scottish Government (No. 2)—
	‘(1) Within six months of the day on which this Act is passed, the Chancellor of the Exchequer shall lay before the House a report on the formula for allocating funds from the Consolidated Fund to the Scottish Government, and on alternative ways of calculating the sums to be paid.
	(2) Within six weeks of laying the report referred to in subsection (1) above, the Chancellor of the Exchequer shall lay before the House proposals for a new funding formula which would ensure that the funds allocated to the Scottish Government are no more than 5 per cent. below or above the equivalent figure for each of the other nations of the UK.’.
	New clause 9—Tax on profits of companies—
	‘In Part 4A of the 1998 Act (as inserted by section 24), after Chapter 4 (inserted by section 30) insert—

Chapter 5
	 — 
	Tax on Profits of Companies

80L Tax on profits of companies
	The Secretary of State shall, within one month of the coming into force of section 80B of this Act, lay in accordance with Type A procedure as set out in Schedule 7 to this Act a draft Order in Council which specifies as an additional devolved tax a tax charged on the profits of companies.”’.
	New clause 19—Spirits, wine, beer and cider duties—
	‘(1) The 1998 Act is amended as follows.
	(2) In Part 2 of Schedule 5 to the Act, in section A1 (specific reservations: fiscal, economic and monetary policy), after the heading “Exceptions”, insert—
	“Spirits duties, wine duties and beer and cider duties”.’.
	Amendment 25,in clause 24, page16,line35, at end insert—
	‘(c) Chapter 5 provides for an Order in Council to specify, as an additional devolved tax, a tax charged on the profits of companies.’.
	Amendment 24,in clause 26, page20,line24, at end insert—
	‘(3) T is deemed to be in Scotland at the end of a day when T commences a journey in Scotland before midnight and arrives at a destination in England after midnight, irrespective of the time at which the border between Scotland and England is crossed.’.
	Government amendments 31 and 15.
	Amendment 26,in clause 32, page25,line10, leave out
	‘with the approval of the Treasury, borrow by way of loan’
	and insert ‘borrow’.
	Amendment 27, page25,line15, at end insert—
	‘(1C) In borrowing any sums under subsection (1A), the Scottish Ministers must have regard to any code of practice agreed by them and the Treasury.
	(1D) A code of practice agreed under subsection (1C) may include provision as to—
	(a) how the Scottish Ministers are to determine and keep under review how much they can afford to borrow,
	(b) the terms and conditions on which sums may be borrowed,
	(c) limits on the aggregate at any time outstanding in respect of the principal of sums borrowed.’.
	Government amendment 32.
	Amendment 28, page25,line26, leave out from beginning to end of line 33.
	Government amendment 33.
	Amendment 29, page25,line43, leave out subsection (10).
	Government amendments 34 and 35.
	Amendment 23,in clause 39, page28,line35, leave out from beginning to end of line 2 on page 29 and insert—
	‘(2A) Subject also to the provision made in sections 26(1) to (6), 27, 28, 29, 30 and 31 as to how those sections are to have effect, Part 3 shall come into force at the end of the period of two months after the new funding formula referred to in subsection (2) of section [Funding formula for Scottish Government (No. 2)] has been approved by resolution of the House of Commons.’.
	Amendment 37, page28,line35, at end insert—
	‘(c) section [Spirits, wine and beer and cider duties]’.
	Amendment 18, page28,line40, at end insert—
	‘(3A) Notwithstanding any provisions in subsection 3(a), (b) or (c), sections 26(1) to (6) and 27, sections 28 and 29, and sections 30 and 31 can not be commenced without the consent of the Scottish Parliament.’.
	Amendment 2, page29,line2, at end insert
	‘except new subsections (1A) and (1B) of section 66 of the 1998 Act, inserted by section 32(3), and subsections (9) and (10), which shall come into force on 1 April 2012’.

David Gauke: It gives me great pleasure to return to the House to discuss the Scotland Bill after the Committee debate in March.
	The first group of amendments on today’s selection list is fairly extensive and addresses several different aspects of the Bill’s finance package. I will set out why we have tabled Government amendments and why we will not accept the non-Government amendments.
	In Committee, we debated the definition of a Scottish taxpayer for the Scottish rate of income tax. I said that the Government would table a new clause to apply the same definition to the Scottish variable rate, in response to one of the recommendations of the Scottish Parliament’s
	Scotland Bill Committee. The reworked definition of a Scottish taxpayer for the new Scottish rate of income tax is a significant simplification. I appreciate that it is unlikely that the Scottish variable rate will ever be invoked. Nevertheless, without the amendment, there would be two separate definitions of a Scottish taxpayer in place at the same time. There is potential for practical difficulties for taxpayers, employers and their professional representatives, who might need to familiarise themselves with one definition for the years up to 2015-16, only to have to switch to a different definition for subsequent years. That is entirely unnecessary.
	Applying the definition of a Scottish taxpayer that has been developed for the Scottish rate of income tax for the purposes of the Scottish variable rate will help smooth any transitional issues, and will also make it easier for people to understand whether they are classed as a Scottish taxpayer. The Scottish Parliament’s Scotland Bill Committee rightly recommended the change, with which the UK Government very much agree, and I commend the new clause to hon. Members.
	On a previous occasion, my hon. Friend the Member for Milton Keynes South (Iain Stewart) raised a particular query. He has tabled amendment 24, about which he intends to speak later. I will respond to the issues that he raises after he has had an opportunity to set out his thoughts on that.
	Government amendment 31 would make a small, technical change, to which I hope the House can agree. Section 989 of the Income Tax Act 2007 contains several definitions, which apply for the purposes of income tax legislation. It includes definitions of the basic, higher and additional rate of income tax. They refer to the rate of income tax set by the UK Parliament in the year in question. Government amendment 31 would extend those definitions to include the rates applicable to a Scottish taxpayer. As I said, it is a minor drafting amendment, and I do not anticipate its proving too controversial.
	The purpose of Government amendment 15 is to correct a technical fault with the Bill so that it is consistent with the Government’s policy intentions as set out in the Command Paper, which states that the Scottish Government will be able to borrow to manage the difference between forecast and outturn tax receipts. However, as I explained in our Committee debate on 14 March, the Bill as it currently stands enables the Scottish Government to borrow to manage this difference only for fully devolved taxes, and not the Scottish rate of income tax. That is a technical fault, which the amendment corrects. I hope that it will be accepted.
	Let me deal with Government amendments 32 to 35. The purpose of Government amendment 32 is to introduce a power, which will enable the Government to amend in future the way in which Scottish Ministers can borrow, including by way of bond sales, without the need for further primary legislation. The Bill gives Scottish Ministers a new power to borrow, by way of loan, from 2015-16 up to £2.7 billion of total debt, £2.2. billion of which can be used to fund capital expenditure.
	The UK Parliament has an interest in ensuring that Scottish Ministers can borrow efficiently and sustainably because, although interest paid on any loans will be funded from the Scottish budget, it will be included in the UK fiscal aggregates. The Bill therefore gives Scottish Ministers the power to borrow in the most efficient and
	sustainable way—from the national loans fund, as recommended by the Calman commission. In addition, should Scottish Ministers so choose, the Bill gives them the power to borrow by way of commercial loan where that represents value for money.
	Reports on the Scotland Bill by the Scottish Affairs Committee and the Scottish Parliament have recommended that Scottish Ministers should be granted additional borrowing powers—specifically, the power to issue bonds. The First Minister made the same points in his discussion with my right hon. Friends the Chancellor of the Exchequer and the Secretary of State for Scotland. The reports and discussions have highlighted the discrepancy between the powers of Scottish Ministers and local authorities, which already have the power to issue bonds.
	So far, the main evidence that has been provided to the Government in support of Scottish Ministers issuing bonds is “because other bodies can do it”. However, with the exception of Transport for London, the vast majority of local authorities have not exercised those powers in recent history, not least because local authorities judge that they have access to more efficient and sustainable forms of borrowing.
	The Government continue to believe that the case against bond issuance is clear cut, particularly in the medium term, given the uncertain outlook and challenging fiscal mandate. All the evidence suggests that further bond issuance would have a negative impact on the UK’s fiscal position.
	In the context of the highest deficit since world war two, the Government would consider allowing Scottish Ministers to issue bonds in future only when that does not undermine the overall fiscal position, or have a negative impact on total UK borrowing. If a case is made that Scottish Ministers’ borrowing powers could be extended without undermining the overall UK fiscal position or increasing UK borrowing, the amendment that I am tabling today would allow changes to the borrowing powers of Scottish Ministers to take effect swiftly, by way of an order.
	The Government have committed to conducting a review of the costs and benefits of bond issuance over other forms of borrowing to help inform any decision. The amendment would have the effect of, first and foremost, protecting the UK’s fiscal position by continuing to allow Scottish Ministers to access the most efficient and sustainable source of borrowing.

Jonathan Edwards: After the Bill has been passed, the Welsh Government will be the only political entity in the British state unable to borrow. Will the Exchequer Secretary address that matter quickly, rather than awaiting some prolonged Calman process, which the Government currently envisage?

Mr Deputy Speaker: Order. I am not sure that that is relevant to the debate.

David Gauke: I want to make it clear that Government amendment 32 would not grant the power of issuing bonds to the Scottish Government. However, it would enable us to move more quickly should that decision be made in future The Welsh Assembly Government are
	not alone in their status, although the amendment would enable us to move more quickly should we decide to proceed in that direction.
	Amendment 2, which was tabled by Her Majesty’s Opposition, would bring forward the introduction of the capital borrowing requirement set out in clause 32 from April 2015 to April 2012. Amendment 26 would remove the role of the Treasury in approving capital borrowing and the restriction that such borrowing must be by way of a loan. Amendment 27 would introduce a new statutory code of practice, to be agreed between the Treasury and Scottish Ministers, to govern capital borrowing permitted by section 66(1) of the Scotland Act 1998. Amendment 28 would remove the £2.2 billion aggregate limit on capital borrowing by Scottish Ministers. Amendment 29 is consequential on amendment 28. As hon. Members wish to remove the borrowing limits from the Bill and the ability to revise those with the approval of the House, clause 32(10) would no longer be necessary, because there would be no such secondary legislation.
	All amendments would have the effect of altering the time scale for capital borrowing and the conditions on capital borrowing. I shall first deal with the timetable for implementing the borrowing powers. The Government believe that the capital borrowing powers are an important part of the package to increase the financial responsibility of the Scottish Parliament. The Bill enacts that new power at the point when Scottish Ministers have the necessary fiscal levers to support borrowing. From 2015-16 onwards, Scottish Ministers will have control over devolved taxes and the Scottish rate of income tax. The new borrowing powers come into effect at the same time, when Scottish Ministers can support such borrowing.
	The House should be aware that, if the borrowing powers were introduced earlier in this spending review period, the UK’s spending plans would be altered—plans which the International Monetary Fund recently endorsed, and plans from which I am sure hon. Members would not want to deviate and put the recovery of the UK public finances at risk and undermine the credibility of the Government’s spending plans. The Command Paper allows Scottish Ministers to access partial borrowing powers in 2013, before the rest of the Bill comes into force, with the consent of the Treasury. That power can be used to make pre-payments to fund large capital projects such as the construction of the replacement Forth crossing. On 13 June, my right hon. Friends the Chancellor and the Secretary of State for Scotland confirmed that partial borrowing powers would be introduced two years earlier than originally intended to help Scottish Ministers to begin large capital projects as soon as possible.
	The Bill contains borrowing limits for important reasons, which I set out in Committee. I should place today’s debate in context. First, the new £2.2 billion borrowing power is additional to the capital budget that Scottish Ministers will receive through the next spending review process. To give a sense of the magnitude of that sum, at the end of this spending review period, the Scottish Government’s capital budget will be £2.3 billion.
	Secondly, Scottish Ministers have an unfettered power to switch resource spending to capital. Their borrowing does not represent free money. Those who pay the
	Scottish rate of income tax must pay the debt interest, but UK borrowing will increase as a result of increased Scottish borrowing. It is therefore surely right that the limit is determined by this House—first through its considerations of the Bill, and subsequently through the approval of any order to alter the limit. The Calman commission and the Scottish Parliament recognised the case for Scottish Ministers receiving new borrowing powers as part of their increased responsibility and accountability. Both recommended that the Treasury should have the ability to set conditions and a cap on the amount that Scottish Ministers can borrow in a year.
	The limit in the Bill is set initially at £2.2 billion, because that represents an acceptable risk for the UK finances that does not crowd out other priorities in the next spending review period.

Andrea Leadsom: If that debt must be consolidated with the UK’s national debt, it should surely be considered as quasi-UK Government debt. Does the Minister therefore agree that if the Scottish National party goes ahead with its vote on independence, it will need to consider very carefully the increased cost of borrowing that would ensue?

David Gauke: We must certainly understand the wider UK consequences of that. That is why there is a cap. In the Government’s judgment, £2.2 billion is the appropriate level at this point.

Stewart Hosie: For the sake of clarity, will the Minister confirm that that £2.2 billion is a cumulative sum, and that the annual amount is £230 million?

David Gauke: Yes, that is the case, but we must consider the consequences of that borrowing for the UK’s debt position. That is the level that we believe is right.
	As I set out in Committee, the £2.2 billion represents a floor, not a ceiling. The Bill provides for the limit to be increased to more than £2.2 billion with the approval of the House, but not for it to be reduced to less than £2.2 billion.

David Mowat: A few moments ago, the Minister mentioned the pre-payment amount for the Forth road bridge. Did the Treasury consider a toll on that bridge, in much the same way as a toll was considered for the Mersey Gateway bridge next to my constituency? If not, is that not asymmetric governance?

David Gauke: The decision on whether to put a toll on the Forth road bridge will be one for the Scottish Government. The Treasury has therefore not considered that proposal. Perhaps my hon. Friend should ask Scottish National party Members what consideration was given to such a toll. I suspect that the answer will be, “Not a lot.” The expression on the face of the hon. Member for Dundee East (Stewart Hosie) is probably confirmation that no consideration was given to my hon. Friend’s suggestion. Asymmetry is inherent in such devolved matters.
	The UK Parliament has an interest in ensuring that Scottish Ministers can borrow efficiently and sustainably, because although interest paid on any loans will be funded from within the Scottish budget, it will be included in the UK fiscal aggregates.

Andrea Leadsom: For the sake of clarity, the Minister tells my hon. Friend the Member for Warrington South (David Mowat) that the decision on whether there will be a toll on the Forth road bridge is a devolved matter, and yet also says that any Scottish Government borrowing would be included in the British national debt. How can that toll be a devolved matter? The UK is involved in keeping the cost of funds to the Scottish Government down so that they can afford to fund a bridge that people in England are unable to afford without charging a toll.

David Gauke: We must remember that any debt service will be financed by the Scottish taxpayer—that is the context.
	We should move on. As I said, any loans will be funded from within the Scottish Budget and included in the UK fiscal aggregates. The Bill therefore continues to give Scottish Ministers the power to borrow in the most efficient and sustainable way—from the national loans funds, as recommended by the Calman commission. In addition, should Scottish Ministers choose to do so, the Bill gives them the power to borrow by way of a commercial loan when that represents value for money.
	The Government continue to believe that Scottish Ministers should be able to borrow only by way of a loan, but because overall macro-economic policy will continue to be a reserved matter, and because Scottish borrowing will impact on the UK fiscal position, it is right that this House agrees the limits and conditions of borrowing. I therefore ask Opposition Members not to press amendment 2 and amendments 26 to 29 to a Division.

Stewart Hosie: The Minister suggests that various Opposition Members from various parties do not press their amendments. Is it not normally in order to hear the arguments for them before jumping to such a strange and presumptuous conclusion?

David Gauke: I do not think it an unprecedented statement. I am sure that the hon. Gentleman and I have served on many a Committee where that has been suggested. I wait to hear how persuasive the case is, but I suspect that I will not be persuaded, and that, to some extent, the amendments may be probing. We await the arguments, and I look forward to them.
	New clause 8, tabled by the right hon. Member for Birkenhead (Mr Field), has two purposes. First, it seeks to legislate for the Chancellor, within six months of the day on which the Bill is passed, to
	“lay before the House a report on the formula for allocating funds from the Consolidated Fund to the Scottish Government, and the alternative ways of calculating the sums to be paid.”
	Secondly, it would require that within
	“six weeks of laying that report…the Chancellor…lay before the House proposals for a new…formula which would ensure that the funds allocated to the Scottish Government are no more than 5 per cent. below or above the equivalent figure for each of the other nations of the UK.”
	As hon. Members know, the formula for allocating funds from the Consolidated Fund to the Scottish Government is known as the Barnett formula, and as hon. Members will recall, the Bill seeks to increase the accountability of the Scottish Parliament to its people by devolving fiscal powers from Whitehall to Holyrood, and deducting a corresponding amount from Scotland’s block grant.
	The Bill does not change the level of funding for Scotland. Future decisions taken by Scottish Ministers will affect the overall funding for Scotland’s public services, because Scottish Ministers will decide whether to increase or decrease devolved taxes relative to the UK. Reforming the Barnett formula is an entirely separate issue from those we are considering in the Bill, and one that the Calman commission did not make any recommendations on. The current formula is an administrative procedure and does not appear in legislation. It is not specific to Scotland, but is a mechanism for allocating funding across all four countries of the UK, so it would not be appropriate to legislate to alter it for Scotland in isolation. The Bill would not be an appropriate place for that

Kate Hoey: I understand why the Minister does not think that discussion of the Barnett formula is appropriate for this evening’s debate, but my constituents feel strongly about the fact that Scotland gets so much more than they do generally. What mechanism could we use to have the Barnett formula looked at?

David Gauke: Partly following the strictures of the hon. Member for Dundee East, I would say that I am loth, at this stage of the debate, to make strong recommendations to the House about which new clauses should be accepted and which should be withdrawn and so on. I simply want to provide the context and argue why the Barnett formula should not be addressed in the Bill. I appreciate that there is a wide range of views on this issue, and that there are strong feelings throughout the UK. I dare say that a number of those views will be expressed this evening—indeed, this debate provides an opportunity for it. At this stage, however, I just want to draw the House’s attention to some of the difficulties with trying to address the matter in the Bill. I shall turn to the substance of the debate in a moment, but that is what I am seeking to do at the moment.

Mark Lazarowicz: I am sure that the hon. Gentleman will want to confirm that if my hon. Friend the Member for Vauxhall (Kate Hoey) got the reorganisation of the formula that she seems to want, the parts of the UK that would lose the most—the ones that are most overfunded by her definition—would be London, where she is an MP, and Northern Ireland, which I know she has a close interest in. If we are going to debate the matter, let us debate the facts rather than the myths.

David Gauke: As I said, I appreciate that there are strong views on this issue, and that they will be expressed this evening. Little did I know, though, that such strong views would be expressed quite so quickly among hon. Members in such close proximity to each other.

Russell Brown: rose —

David Gauke: And now I will hear another perspective.

Russell Brown: The Minister mentioned the four nations, but I am sure he will want to correct that, because not only are there variations between the four nations, but there are regional variations within England as well.

David Gauke: Of course, and there are regional variations within all the four nations. The point is that there are strong views on this issue. I am making the case for why it is difficult to address it in the Bill. Reforming the Barnett formula is an entirely separate issue from those we are considering in the Bill, and from the matters that the Calman commission looked at. As I said, the formula does not appear in any legislation as such, and there would be disadvantages in trying to come up with a legislative answer. However, I appreciate that this is an opportunity to debate the matter.

Frank Field: rose —

David Gauke: I am sure that the right hon. Gentleman will continue this debate.

Frank Field: Might the Minister tell the House whether he thinks that the Barnett formula is now fair? If it is not, when do the Government intend to do something about it?

David Gauke: The Government understand the concerns expressed about the devolved funding arrangements, but we have also made it clear that the priority now must be to reduce the deficit, and any change to the current system and Barnett formula must await the stabilisation of the public finances. The Bill does not rule out or rule in reform of the formula in the future, but we do not believe that now is the right time. A change in the Barnett formula is not the purpose of the Bill, and it would not be appropriate to legislate for it here. As I said, I look forward to this debate, as right hon. and hon. Members will clearly take the opportunity presented by the Bill to express their views on this particular point.

David Mowat: Will the Minister give way?

David Gauke: And I know that there is one hon. Member in particular who will take that opportunity.

David Mowat: I understand that the Exchequer Secretary does not want to spend too long now talking about the Barnett formula, so I will be quick. He said that we are too busy sorting out the deficit to address the Barnett formula, which I think is a fair and reasonable point. That is why many of us think that we should put in place a process to ensure that by 2015, when, as I understand it, the structural deficit will be eliminated, we can put in place a fair and transparent policy.

David Gauke: I understand the views expressed by my hon. Friend. There are a number of changes and developments in this area, not least the powers in the
	Bill. I agree with him that this will continue to be a live issue, but at this stage I am not in a position to make any promises to him. However, I am sure that this issue will continue to be debated, and strong views will be expressed. I can understand the points he makes, but this is not the time for a legislative solution.
	Amendment 23, tabled by the right hon. Member for Birkenhead, is consequential on new clause 8 and would delay the financial provisions in part 3 of the Bill coming into force until two months after the House passes a resolution approving the Chancellor’s proposals for a new funding formula. It would then automatically bring part 3 into force two months after such a resolution. I set out why I did not consider it appropriate to debate at this time a new funding formula for Scotland when I discussed new clause 8. The Government are clear that this is a UK-wide administrative procedure and therefore has no place in the Bill. The Government’s priority is to stabilise the public finances and reduce the deficit before making any changes to the Barnett formula, as I have said.
	Even were we able to accept new clause 8, the manner of commencement set out would be problematic because it would create technical problems by potentially bringing in consequential amendments relating to the Scottish variable rate before that itself had been repealed. I am sure that that is not what the right hon. Gentleman intends. The new clause would have other consequences, however. It would mean that clause 32, on borrowing provisions, could not be brought into force until an agreement had been reached on a new funding formula for Scotland. As I have set out, the changes introduced by the Bill are not contingent on a new funding formula being agreed to replace the Barnett formula, so I do not see the need to wait to introduce the borrowing clauses until such a new formula has been agreed.
	Amendments 25 and 37, and new clauses 9 and 19, relate to corporation tax and alcohol duties. These amendments propose to increase the power in the Bill to provide for an Order in Council specifying corporation tax and alcohol duties as devolved duties. The Scottish Government have publicly requested that six additional powers be included in the Bill, including powers over corporation tax and alcohol duties. I understand that the First Minister has met colleagues in the Government to highlight those requests. In those meetings, the First Minister agreed to provide detailed written analysis of the benefits to both Scotland and the UK of devolving those powers. No such papers have yet been provided. We await them with interest, because we have yet to hear the case made in detail.
	As hon. Members will recall, the Government are committed to implementing the recommendations of the Calman commission, which considered the merits of devolution for a wide range of taxes and decided that neither corporation tax nor alcohol duties were suitable candidates for devolution. Calman concluded that the potential administrative impact of devolving either tax would be significant. The creation of compliance costs for businesses operating on either side of the border, as well as the increased collection costs for the Government, would be undesirable, especially in the present economic climate. The risks of tax avoidance and arbitrage could also be increased, with additional costs to the Government and the UK Exchequer. These arguments apply to both corporation tax and alcohol duties.
	Calman also noted that if comparable levels of public services were to be maintained, the scope for substantive reductions in the rate of corporation tax in Scotland would be limited, unless the Scottish Government were willing significantly to increase revenues from other sources, such as income tax. The figures involved could be significant. For instance, if we take the Scottish Government’s estimate of the corporation tax base, published in their “Government Expenditure and Revenue Scotland” report, and apply the methodologies developed for the Government’s paper on rebalancing the Northern Ireland economy, the cost of reducing Scottish corporation tax to 12.5%—the current rate in the Republic of Ireland—would be just over £2 billion. However, the Scottish economy is very different, not least in the presence of many large multinationals, particularly from the financial sector, whose current activity is unlikely to be adequately covered in the gross value added estimate, but whose profits are additionally likely to be attributable to Scotland with regard to corporation tax.
	Provisional HMRC analysis has indicated that losing payments from large Scottish-domiciled groups could add £600 million to the direct costs. Such tax cuts would have to be funded, either by significantly reduced levels of public spending in Scotland or by tax rises in other areas. It is worth noting that these are initial estimates, and are likely significantly to underestimate the scope for profit shifting to Scotland. The model uses similar assumptions to those applied to the costing for Northern Ireland. However, given the geographic proximity of England and Scotland, the integrated infrastructure, the large number of big GB-owned groups with a substantive presence on both sides of the border, and the relatively large and complex nature of the Scottish economy, there are likely to be greater opportunities for groups to shift profits there than may be the case for Northern Ireland.
	In addition, corporation tax is a very volatile tax, and would create much more revenue risk for the Scottish budget. For instance, corporate tax receipts fell by 16% from 2008-09 to 2009-10, while income tax receipts fell by 5%. Such a large volatile income stream would place great risk on the Scottish budget. Income tax, which is more predictable and less volatile, is a much more suitable candidate for devolution. The commission based its decision on the strong evidence that it received from the independent expert group and the alcohol retailing and production sector. The evidence identified increased compliance costs and significant scope for tax avoidance, given the mobility of goods such as beer, wine, cider and spirits.

Eilidh Whiteford: My recollection is that the Calman commission refused to rule out devolving corporation tax, should that happen in other parts of the UK. Perhaps my recollection is wrong, but it would be a mistake to misrepresent in this debate what the Calman commission actually said.

David Gauke: The Calman commission did not recommend devolving corporation tax as substantial practical profit shifting issues would arise, and we cannot ignore the fact that it would need to be paid for. This is not something that we could all sit round in a room negotiating, before coming up with a number. To comply with the Azores judgment, made under European law, it would
	be necessary to identify the precise number. I should also make it clear that the cost of any reduction in corporation tax would have to be met by increased alternative taxes or a reduction in the block grant.

Eilidh Whiteford: It is important to differentiate the substantive point of whether this Government support devolving corporation tax from what the Calman commission report actually said. Having found it—I think—I can tell the Minister that the Calman commission recognised that
	“changes to Corporation Tax can be a tool for economic development,”
	and did not
	“rule out a scheme for devolving Corporation Tax in the future as part of wider reform across the devolved nations.”
	Does the Minister accept that that is actually what was in the Calman commission report?

David Gauke: But the Calman commission did not say that that was the right way forward at this point. As I have said, some very substantial issues would need to be addressed, not least the opportunity for profit shifting and the impact on the UK Exchequer were Scotland to have a lower rate of corporation tax, as businesses operating in Scotland and England would shift their profits to Scotland, which would disadvantage the UK as a whole.

Stewart Hosie: A number of businesses moved to Ireland in the last Parliament to take advantage of lower corporation tax. A number of others moved to continental Europe, to the Netherlands. One of the drivers for this Government reducing corporation tax was to send out that signal. That change will not necessarily be paid for by changes to allowances or spending cuts; it will be paid for in the medium and long term by increased economic growth, which is a consequence of a lower business tax regime. Why has the Minister excluded the potential of growth in Scotland from it having lower corporation tax, and merely highlighted the payment in other ways?

David Gauke: Let me be clear: I am not making the case against lower corporation tax per se; I am saying that if Scotland had a lower rate of corporation tax, that would have an impact on the Exchequer, and Scotland and the Scottish Government would have to pick up that cost. I do not believe that that is a matter of dispute or that the hon. Gentleman disagrees with that. Indeed, we are not even talking about something that we could pursue under European law—I am sure that he will be aware of the details of the Azores judgment. [ Interruption. ] That point is clear, so I am surprised that there are so many mystified faces on the Opposition Benches.

Ian Davidson: This relates to the Minister’s point about the Azores judgment—people in my constituency speak of little else. I want to clarify the important question of transparency. Have the Government provided the Scottish Government with the figures that the Minister has quoted, in order that they can challenge them or produce any additional information? It is important that this debate is conducted
	not just at the level of rhetoric, but that firm proposals are made with numbers attached. Will the Minister therefore clarify whether there has been an inter-governmental dialogue on these matters?

David Gauke: We are talking about preliminary numbers, which I have put forward on the basis of early estimates produced by the Treasury this week. We are keen to engage with the Scottish Government, just as we have with the Northern Ireland Executive. I am sure that there will be exchanges of correspondence, meetings, discussions and a full examination of both the numbers and the methodology used in producing them. We are more than willing to engage in that process, but we are also waiting for the Scottish Government to offer their analysis of the impact of devolving corporation tax, of what the costs would be, and of the economic advantages and disadvantages. We know that the Scottish Government take a great interest in this—they make this point on a regular basis—but we await their analysis.

Ann McKechin: I think I am correct in saying that the Minister for Culture and External Affairs in the Scottish Government wrote to Members before the Easter recess suggesting clauses to be added to the Bill, including one on corporation tax. On that basis, is the Minister saying that the Scottish Government provided no information on their analysis of the impact of this tax? Since first requesting the information, how long has he waited for it?

David Gauke: I look to others for inspiration on the precise details, but we are certainly talking about months. The hon. Lady is right to say that the detailed analysis has not been provided. I am sure that the Scottish Government are working very hard to produce it, but we have not received it. It could have been helpful for this evening’s debate, but so be it.

Michael Weir: It might have been difficult for the Scottish Government to provide that information during the purdah period, and they were re-elected only a matter of weeks ago. It is perhaps no surprise, therefore, that those weighty documents have not yet arrived on the Minister’s desk.

David Gauke: I have to make a confession to the House: I have come only relatively recently to these issues. My understanding, however, is that the Scottish National party has been interested in this policy for some years. I am sure that if it is a priority, and I understand that it is, we will receive the paper very soon. I look forward to receiving it.

Russell Brown: Perhaps I should be directing this question not to the Minister but to the Secretary of State for Scotland, because he has been engaged in this process. Has there been any indication of how long we can expect to wait for these figures?

David Gauke: No, there has not, but I am sure that it is a priority and that they will arrive shortly.

Cathy Jamieson: Perhaps the reason the Scottish Government have not yet been able to produce the figures is that some of the international studies are not to their liking because they show that lower rates of corporation tax do not necessarily lead to higher growth rates.

David Gauke: The hon. Lady may speculate about the reason, but it is not for me to do so. Perhaps I have done enough speculating as it is—

Angus MacNeil: rose—

David Gauke: Or am I going to be encouraged to do some more? I give way to the hon. Gentleman.

Angus MacNeil: The Minister talks about the Scottish Government justifying why they should have this power, but have the UK Government given any justification for why they should hold on to the power over corporation tax in Scotland?

David Gauke: It was about five minutes ago when we last set out the reasons that corporation tax remains a reserved matter. The Bill provides for a substantial devolution of tax powers to the Scottish Government, but corporation tax has always been a matter for the United Kingdom. We are exploring this matter in the context of Northern Ireland, but if there is a case to be made for a radical change in this area, we would like to hear it and we look forward to doing so soon.

Ian Davidson: Did not the Minister say earlier that the Government had produced their latest estimates only about seven days ago? In the circumstances, this criticism seems a trifle unfair, even though the Scottish Government have had a long time to produce theirs. Surely they would benefit from this Government sharing their figures. If the Treasury undertook to pass on its figures to the Scottish Government, I am sure that a response would soon be forthcoming, enabling us to conduct this debate properly and not simply on the level of transitional demands.

David Gauke: The hon. Gentleman is clearly anxious to move the debate on, and he makes a perfectly reasonable point. The Treasury and the Government would be quite happy to share our analysis with the Scottish Government, and if that would assist them in their work, we would be pleased to be of assistance.

Stewart Hosie: Speaking of sharing information, the Minister has raised the spectre of the Azores ruling, but a comparable and permanent reduction to the block grant in place of the devolution of corporation tax would certainly meet all the state aid rules. The Azores judgment smokescreen that the Minister has thrown up is quite irrelevant.

David Gauke: The point I was making was that the cost would have to be borne by the Scottish Government, through either increased taxes or a reduction in the block grant. We would clearly have to enter into discussions with the Commission, but I think that he is right in principle, and that such a proposition would comply with the Azores judgment. I am merely making the
	point that, although the final cost would have to be determined, it would be substantially higher than £2 billion if it was the Scottish Government’s policy to bring the rate of corporation tax down to the level that pertains in the Republic of Ireland.
	I shall move on to amendment 18, which seeks to make the date for commencement of all the taxation provisions in the Bill—those relating to the Scottish rate of income tax, the Scottish tax on land transactions and the Scottish tax on disposals to landfill—contingent on the consent of the Scottish Parliament. The process to be used to provide consent is not detailed in the amendment, but I assume that the hon. Member for Dundee East has in mind something akin to the legislative consent motion convention to which the Bill is subject. I consider this amendment to be unnecessary. Similar amendments were tabled by the hon. Gentleman in Committee. We have committed to working closely with the Scottish Government as we move towards full implementation of the measures in the Bill. This engagement will ensure that the Scottish Government can keep the Scottish Parliament apprised of implementation work in good time.
	As hon. Members will be aware, the Scottish Parliament voted on the Bill in March, with 121 of the 129 Members voting in favour; this included the Scottish Government. Following the election in May, the Scottish Parliament established a new Scotland Bill Committee to consider amendments to the Bill. This will ensure a further opportunity for the Scottish Parliament to vote on changes to the Bill.
	As I said on Report in relation to the taxes to be fully devolved, we made it clear in the Command Paper accompanying the Bill that if the Scottish Parliament was not ready to introduce the smaller taxes in April 2015, we would consider delaying the switch-off of the UK-wide versions of the taxes in Scotland. Should the Scottish Government and Parliament decide that they do not wish to put in place a Scottish version to cover the existing tax base, we will not leave the current landfill tax or stamp duty land tax in place. It will be for the Scottish Government to decide what, if any, arrangements they wish to put in place, once the matter is devolved to the Scottish Parliament. I consider this additional requirement to be unnecessary and I am therefore minded to urge the hon. Gentleman to withdraw his amendment, but of course I shall wait with interest to hear his arguments. This has been a somewhat lengthy speech, for which I apologise to the House, but I have attempted to deal with a large number of new clauses and amendments. I hope that that has been helpful, and I look forward to the forthcoming debate.

Stewart Hosie: As the Minister has pointed out, there is a large number of new clauses and amendments in this group. I intend to give them a decent airing, not least because I was chastised by the hon. Member for Glasgow North (Ann McKechin) in a recent newspaper article for speaking for barely 14 minutes in a previous debate. I would not want to disappoint her by not providing closely argued contributions on the new clauses and amendments tonight. It is also worth putting it on record that barely three hours for a Report stage is quite inadequate.
	Our amendment 29 and new clause 9 deal with corporation tax, about which the Minister went on at some length. This is a tax levied on profits and the
	Scottish Government are seeking to devolve the competence to use it as key policy lever to promote economic activity in Scotland. It is important to focus not on the dry detail of the amendments, but on what we and any Scottish Government would do with the powers. We believe that corporation tax can be a key element in the country’s overall economic strategy and can promote economic growth and job creation by enhancing international competitiveness and encouraging innovation and investment.
	We believe that the case for devolving corporation tax is clear. Over the past 30 years, Scotland’s economy has grown more slowly relative to both the UK and the average of small EU countries than it ought to have done. We believe that for Scotland to fulfil its economic potential, additional levers are required and corporation tax is, I believe, a key mechanism. It can be an important tool in helping to support increased business start-ups, increased business research and development and investment, and in encouraging more firms to locate their headquarters in Scotland—the very reasons, I suspect, why the UK Government announced a lower corporation tax rate and a strategy for reducing it further.

Jim Sheridan: Far be it for me to be a cynic, but could it be that both Governments—the UK and the Scottish Government—wish to reduce corporation tax to appease the big business people who make donations to their political parties?

Stewart Hosie: No. That would be extraordinarily cynical, and not something that even the hon. Gentleman in his daftest moments would actually believe to be true—[Interruption.] The hon. Member for Central Ayrshire (Mr Donohoe) says from a sedentary position that the hon. Gentleman does believe it. That worries me even more. I suspect that that kind of attitude from Labour sends a signal that Britain and Scotland are not open for business, which is a dreadful signal to send out.
	We also believe that corporation tax can be used to support the development of new industries, which is vital. As it stands, the Bill contains no new effective levers for economic growth. The UK Government have made it clear that the Bill is primarily about improving financial accountability and political governance. There is no problem with either of those things, but we need economic development as well—and the tools to do the job. We are firmly of the view, as are the Scottish Government, that any transfer of powers to Scotland must include real economic levers to promote jobs and growth.
	The argument from the UK Government that we cannot have corporation tax powers might appear rather contradictory. Clearly, there is increasing support for the principle of devolving the responsibility for corporation tax—not least to Northern Ireland, where it is currently under active review.
	With those points in mind, I back the Scottish Government in seeking devolved competence for corporation tax to be used as a key policy lever to promote economic activity in Scotland. We are seeking the responsibility to vary both the corporation tax base
	and the tax rate, with the base defining the element that is subject or liable to be taxed—the bulk of profits, netting out allowances and so forth—and the tax rate being the amount of taxable profit required to be paid during each accounting period. At the moment, that is estimated to be about £2.8 billion for Scotland on 2008-09 figures— and for very good reason that excludes North sea corporation tax. It comes in at about 6.5% of the total tax revenue in Scotland. We believe that the full devolution of corporation tax with an appropriate reduction in the block grant, which covers the Azores issue, would provide the Scottish Government with a new lever to promote growth and jobs.
	The position of the Scottish Parliament Scotland Bill Committee was established in a very clear conclusion:
	“The Committee’s view is that if a scheme to vary corporation tax were to be available in some of the devolved countries of the UK as a tool of the UK Government’s regional economic policy, it should be available as an option for a Scottish Government to use also.”
	That is incredibly important. Now that it is clear that such a tool is being considered for Northern Ireland in the UK Government’s consultation on “Rebalancing the Northern Ireland economy”, it follows that consideration must now be given to devolving corporation tax to Scotland.

Mark Lazarowicz: I want to be clear about what the hon. Gentleman is saying. He said that if there were to be a devolution of corporation tax and the ability to vary it, an appropriate change would be made to the level of the block grant. Does he mean that if corporation tax were reduced in Scotland by £1 billion, an equivalent £1 billion reduction would take place in the block grant? Is he talking about a like-for-like reduction?

Stewart Hosie: It has to be initially to get this kicked in. At that point, the Scottish Government are rightly responsible for their revenue raising and their tax spending within it. That is normal, grown up and quite appropriate.

Brian H Donohoe: I ask a simple question: what does the hon. Gentleman mean by “initially”?

Stewart Hosie: A permanent reduction for corporation tax to be devolved and taking responsibility for the income we raise to pay for the services we have.

Sheila Gilmore: Will the hon. Gentleman let us and Scottish taxpayers know how that financial gap would be met in the period before any economic benefits might arise? Would there be cuts in services, for example, or would the Scottish Government have to consider a rise in income tax for people in Scotland?

Stewart Hosie: The hon. Lady predicates her argument on failure, as Labour Members tend to do. There is no reason to believe that there would be a net loss of revenue to Scotland. Let me put it to the hon. Lady in a different way. The UK went into the recession with £0.5 trillion of debt; it now sits somewhere close to £1 trillion and it is forecast to rise under this Administration to about £1.5 trillion by 2014-15. Scotland, however,
	has had a net surplus over many years and it is certainly a surplus relative to the UK even in very recent years. Instead of talking Scotland down, we need to be serious about how to gain the powers to grow the Scottish economy and take responsibility for our own actions, which is vital.

Sheila Gilmore: I understand the optimism and do not want to cut through it in any way. However, the hon. Gentleman said that he accepted that there would initially be a reduction in the block grant, which will initially create a financial issue. I was simply asking how it would be met in the short term.

Stewart Hosie: It will not be a reduction because we will have the corporation tax yield, which is comparable to the reduction in the block. It is the same amount of money initially and we take responsibility thereafter.

Brian H Donohoe: rose —

David Mowat: rose—

Stewart Hosie: I have already given way five or six times and I want to make progress. There will be plenty of opportunities for hon. Members to intervene later.
	There is a very strong case for additional powers. Evidence shows that corporation tax can be a key element in a country’s overall economic strategy and it has the potential to promote economic growth by enhancing international competitiveness and encouraging innovation and investment. As the Minister said, we have long argued for devolution of corporation tax as a powerful means of addressing the economic challenges facing the Scottish economy. We believe that a centralised and uniform corporation tax structure disadvantages nations such as Scotland to the benefit of London and the south-east of England. To say that is not to be anti-London or anti-south-east; it is just to say that when businesses reach a certain size, they tend, other things being equal, to be attracted to the largest conurbations. In the UK, that of course means London.
	The evidence base for devolving corporation tax powers to Scotland is pretty clear. Over the last 30 years, as I said at the beginning, Scotland’s economy has grown more slowly relative to both the UK and the average of other small EU countries. One reason for that relatively weaker economic performance has been the relatively smaller corporate sector in Scotland relative to other parts of the UK. Business birth rates are lower, the business base is smaller and Scottish companies typically engage in less research and development.
	As I said, there is also evidence that Scottish headquarters drift south of the border once businesses have reached a certain size. Effective use of corporation tax could serve as a powerful tool to address those trends by improving competitiveness and encouraging investment and expansion. Evidence shows that, at the margin, corporation tax rates can be an important factor in international firms’ decisions about foreign direct investment, which is one of the key objectives of the Scottish Government and Scottish Development International.
	At the same time, a number of key sectors in the Scottish economy face tough competition from abroad. Companies abroad receive attractive tax breaks as part of allowances in relation to corporate taxation. The
	computer games industry, for example, has received a very attractive proposition from Dublin, and receives tax breaks in Montreal that have been denied by our Government despite forceful representations to the Minister by members of all parties. Improvements in those areas will help to boost productivity and, ultimately, the competitiveness of the Scottish economy, which will benefit not just Scotland but the United Kingdom as a whole.
	The devolution of corporation tax powers is not solely about making possible the creation of a more competitive environment within the Scottish economy; it also about increasing and promoting accountability. A greater devolution of economic policy levers and tax revenues means that the Scottish Government will have the levers that they need to increase sustainable economic growth, and an opportunity to reinvest the proceeds of that growth—higher long-run tax revenues—in Scotland’s public sector. Having control over corporation tax would also mean that the Scottish Government would bear the risk on the economic levers. We believe that positive reform must be about balancing the revenue and expenditure implications of policy choices, and about giving policy makers the levers to promote economic growth.

Alan Reid: According to the hon. Gentleman's logic, if the power were devolved, the Scottish Government would reduce corporation tax. How would the gap in the Scottish Government’s revenue be plugged? Would that be done by means of higher taxes or a lower standard of services?

Stewart Hosie: The hon. Gentleman must have been asleep for the last 14 minutes, because that is precisely the question that the hon. Member for Edinburgh East (Sheila Gilmore) asked. I am surprised that he did not hear or understand my answer to her question, which was that the corporation tax yield would fill the gap caused by the reduction in block grant.

David Mowat: The hon. Gentleman made a powerful point a few moments ago, if I heard him aright. He said that, unlike the United Kingdom, which has a significant deficit, Scotland had experienced a surplus over the last few years. Can he tell us how, in reaching that conclusion, he accounted for the bail-out of Royal Bank of Scotland?

Stewart Hosie: I have two answers to that question. The first is that in the 40 years before the crisis, Scotland experienced a surplus on average. The second relates directly to the hon. Gentleman's question. I am fed up with the argument that runs “Scottish banks bad, English banks good.” There seems to be a failure of basic understanding. Northern Rock took £20 billion, as did the Lloyds banking group. No one seems to speak about Northern Rock. Bradford & Bingley required £37 billion. RBS required £45 billion, but a large chunk of that related to the asset protection scheme. It was not a question of Scottish banks’ being bad and needing to be bailed out while all other banks were fine.
	I do not want to drift too far from the new clause, but the Office for Budget Responsibility made it clear in its assessment earlier this year that the net impact of the financial crisis measures would be a surplus of £3.5 billion
	for the taxpayer. It is interesting that the hon. Gentleman does not seem to know what the out-turn figure is likely to be.
	Amendment 25 provides for powers to charge a tax charged on the profits of companies—

Alan Reid: Will the hon. Gentleman give way?

Stewart Hosie: Not at this point.
	New clause 9 would allow for the introduction of an additional devolved tax charged on the profits of companies, and would require such a proposal to be placed before both Houses of Parliament.

Mark Lazarowicz: Will the hon. Gentleman give way on that point?

Stewart Hosie: No, not on that point.

David Gauke: rose—

Stewart Hosie: I will give way to the Minister.

David Gauke: I know that the hon. Gentleman is keen to move on from the subject of corporation tax, but I seek clarification, I think with good reason. He said that he understood the Azores judgment and what was necessary for compliance with it. He said that if the yield from corporation tax went to the Scottish Government, the block grant would be reduced and everything would be fine. All that is correct. However, if the Scottish Government reduce corporation tax, there will be a cost. He has not made clear how the Scottish Government would deal with that. Would they do so by spending less or by increasing other taxes?

Stewart Hosie: Evidence that I have seen in a significant number of companies suggests that the reductions in block grant would be phased in. We see a trend increase in business tax yield as business tax rates are reduced. I am sure that the Minister has seen similar figures, which may have driven some of his own policy decisions. I suspect that Scotland would be unique if we did not follow a pattern that has been seen time after time in other countries.

Alan Reid: rose—

David Gauke: rose—

Stewart Hosie: I will give way one more time to the Minister.

David Gauke: The hon. Gentleman is presenting the Laffer curve argument. He suggests that a corporation tax cut could pay for itself. As he knows, I support that idea and am looking at what the Government are doing in that connection. It is not altogether surprising that there are advantages in reducing corporation tax, but, initially at the very least, it comes at a cost. We had to put that in the Red Book. Does he believe that there would be no cost, or does he believe that the tax cuts would immediately pay for themselves?

Stewart Hosie: I am glad that the Minister agrees with my direction of travel. What I am saying is that the Scottish Government would have to take responsibility for the consequences of Scottish Government policy, as is right and proper.

Mark Lazarowicz: rose—

Alan Reid: rose—

Stewart Hosie: I will give way to the hon. Member for Argyll and Bute (Mr Reid), but then I shall try to move on to excise duty.

Alan Reid: If the hon. Gentleman's argument is correct and reducing corporation tax results in an increased tax yield, that will apply in England and Northern Ireland as much as it will in Scotland. If there are different corporation tax rates in different parts of the United Kingdom and if the hon. Gentleman's argument is correct, surely every part of the United Kingdom will enter into a competition to reduce corporation tax, and we will end up with a race to the bottom to the detriment of all parts of the UK.

Stewart Hosie: I do not want a race to the bottom, but I do believe in tax competition. It is a pity that the hon. Gentleman and his new-found friends do not.
	I must now move on from corporation tax to excise duty. Amendment 37 would ensure that provisions relating to alcohol excise came into force two months after the enactment of the Bill. New clause 19 would amend the Scotland Act 1998 so that alcohol duties became an exception to the general reservation in that regard.
	All excise duties are currently levied by the UK Government. Alcohol duty is one of the most important excise duties levied in the UK. It is estimated to raise approximately £800 million a year in Scotland, less than 2% of the total tax yield in and on behalf of Scotland. In addition to raising revenues for the Exchequer, one of the key aims of the duty is to reduce excessive consumption of alcohol, which has been proved to lead to a variety of health and social problems. In the current devolution framework, the Scottish budget typically picks up the cost of addressing those problems through police, health and some social welfare costs expenditures. That is done entirely within the Scottish block. Devolving responsibility for excise duty to Scotland would help to ensure that the tax system for alcohol consumption was consistent with the alcohol policy of the Scottish Government and equipped to tackle one of the greatest health and social challenges facing Scotland.

Jim Sheridan: Will the hon. Gentleman give way on that point?

Stewart Hosie: Certainly.

Jim Sheridan: As chair of the all-party parliamentary Scotch whisky and spirits group, I can tell the hon. Gentleman that the Scottish whisky industry is deeply concerned about his proposals. What worries the industry are the administration costs. It would be necessary to designate the final destination of the product, and, even
	more worryingly, Members of Parliament would bear the additional burden of taking carry-outs from London to their constituencies in Glasgow.

Stewart Hosie: I suspect that any MP trying to take a carry-out through airport security would immediately be stopped.
	The devolution of alcohol excise duties would also enable the Scottish Government to implement a revised alcohol duty structure to offer greater protection to the competitive position of Scotch whisky, something we have tried to do on several occasions in a number of past Finance Bills. On 12 May 2009, the vote on alcohol duty took place at half-past midnight. We were trying to implement a fair rate of duty—which we can achieve through the devolution of excise duties—so that alcoholic beverages were taxed on their alcohol content, and on no other spurious measures. Interestingly, five Conservatives managed to vote with us, yet 268 Labour Members voted against, thereby maintaining the unfair level of duty on Scotch whisky. I am sure the hon. Member for Paisley and Renfrewshire North (Jim Sheridan) is sincere in his view, but it does not stand the scrutiny of the recent voting record.
	The devolution of excise duties ought to be handled through the devolution of additional powers as described in the amendment, because alcohol duty is levied on all products consumed in the UK irrespective of their country of origin. As a result, the UK Exchequer collects duty on Scotch whisky only if it is consumed in the UK, as exported whisky is not liable for excise duty. Similarly, imported products such as spirits produced overseas are liable for duty when entering the country to be sold in the UK market. We seek to devolve this power, and the Scottish Government seek the responsibility to vary the rate of duty levied on products in Scotland and to implement a more streamlined and efficient system of alcohol taxation that better targets rates of duty to combat binge drinking and excessive consumption of cheap alcoholic products, and that supports a fairer and less discriminatory system for premium products such as Scotch whisky.

Brian H Donohoe: Will the hon. Gentleman at least give credence to the fact that over a great number of years previous Governments held back from imposing higher taxes on Scotch whisky, along with all other spirits, and that as a consequence the level playing field he seeks is close to being achieved?

Stewart Hosie: I am prepared to recognise that duty did not rise for a number of years, but that is not the point I am making. My point is that alcohol taxation is unfair because it is based on different types of alcoholic drink, and not entirely on alcoholic strength.

Brian H Donohoe: But it is getting to that point.

Stewart Hosie: It is no such thing, as I am sure the hon. Gentleman’s contacts in the Scotch whisky industry will confirm.
	There is a strong social case for the devolution of alcohol duty, not least because there is clear evidence that, for alcohol, price is a driver of consumption. There is strong evidence from numerous surveys in
	Europe, America, Canada, New Zealand and elsewhere that levels of alcohol consumption in the population are closely linked to the retail price of alcohol. As it becomes more affordable, consumption increases, and as the relative price increases, consumption falls.
	We, and the Scottish Government, are committed to introducing a minimum price for alcohol, and gaining control over the excise duties would provide an additional mechanism to address excessive alcohol consumption. That would help to reduce the annual cost of alcohol misuse in Scotland. Devolving excise duty would enable a future minimum price per unit to be established within the excise system. Under the current system, the introduction of a minimum price is estimated to generate additional revenue for retailers, not the UK or Scottish Government. That was the argument the Labour party made in the Scottish Parliament. Devolving excise duty for alcohol would therefore result in all the additional revenue from increasing the price of low-cost alcohol products accruing to the Scottish Government, and those revenues could then be reinvested in public services in Scotland. The case for devolving alcohol duties is very strong indeed.

Alan Reid: I agree with one of the hon. Gentleman’s points: alcoholic drinks should be taxed on alcohol content. There is a practical problem with his amendment, however. It is my understanding that he wants to increase taxes on alcohol in Scotland, but if alcohol is then priced cheaper just across the border in Berwick or Carlisle, surely a lot of revenue will be lost by people nipping across the border to buy their drink?

Stewart Hosie: There are always borders. The hon. Gentleman was presumably one of the 28 Lib Dems who backed us in 2009. I am pretty sure some of the Lib Dems in the Scottish Parliament now back minimum pricing. I ask for a wee bit of constituency in terms of the policy therefore, and given there are only five Lib Dem MSPs, it should not be too difficult to do a quick phone around.
	I turn to the topic of capital borrowing and amendments 26 to 29. We all know that infrastructure investment is an essential contributor to productivity and economic growth. That is presumably why the Chancellor of the Exchequer made great play of spending £2 billion more on capital projects in the comprehensive spending review period than the previous Labour Administration had planned to spend. In the short term, such expenditure can boost economic growth, total output and employment. Over the long term, capital investment, both public and private, is a key driver of productivity, competitiveness and long-term economic growth.
	Public sector investment that enhances a country’s physical, technological and digital infrastructure can increase the productive capacity of the economy and drive private sector growth and investment. Indeed, we know that direct capital investment would save or create twice as many jobs as the same amount of investment used for a VAT cut, such is the scale of the economic multipliers of direct capital investment.

Jim Sheridan: The hon. Gentleman is absolutely right that this does create jobs. Can he therefore justify his Government’s cancellation of the Glasgow airport rail link project?

Stewart Hosie: Some projects were simply unaffordable, not least because a number of parties—the other three parties represented here now, in fact—voted for half a billion pounds for the Edinburgh tram system, and look at what an overwhelming success that is!
	The Scottish Government are responsible for the vast majority of Scotland’s public investment, covering transport, water, health, education, local government, prisons, housing and so forth. There is, I hope, now widespread agreement across the political spectrum that the Scottish Parliament should have full responsibility to determine the pace and scale of Scotland’s infrastructure investment programme, within a prudent and sustainable long-term financial framework. The Scottish Parliament should have substantial capital borrowing powers to fund productive expenditure for the following purposes: for very large, discrete projects or programmes such as the Forth crossing, which the Minister mentioned; to provide medium-term economic stimulus similar to the accelerated capital programme undertaken in 2008-09 and 2009-10; to smooth the profile of investment in key public services; and to help to lever in additional investment, particularly from the private sector.

Sheila Gilmore: Given what I understood to be the hon. Gentleman’s party’s green environmental credentials, I am surprised that the capital projects he appears to favour are largely to do with roads, rather than public transport, such as the tram proposal that has been mentioned.

Stewart Hosie: The hon. Lady’s surprise is a matter for her, not me. An investment programme is in place that includes housing, environmental and insulation programmes and a large number of other programmes in Scotland, but we are discussing capital borrowing, not the specific projects for which it might be used. That will be a matter for the current and future Scottish Governments.

Sheila Gilmore: I must take the hon. Gentleman up on the point about housing, because I understand—from a recent report by Shelter, for example—that the number of new affordable homes being started in Scotland this year will have fallen from 6,000 to 1,500.

Stewart Hosie: That report is probably for the overall statistics. Sadly, because of the banking crisis, the banks’ withholding of cash and the difficulties with Bradford & Bingley, which funded housing associations, the slack has had to be taken up by the Scottish Government, who have been funding as many new housing starts as is humanly possible. I find it extraordinary that, given the thousands of houses that have been contributed to by the Scottish Government, the hon. Lady or anyone else on the Labour Benches can talk about Labour’s record, which, from memory, was not 6,000, 600 or 60, but six council houses being funded by that Scottish Government.

Sheila Gilmore: rose —

Stewart Hosie: I have given way twice—I am going to carry on.
	As I was saying, the Scottish Parliament should have substantial capital borrowing powers for very large, discrete projects, the provision of medium-term economic
	stimulus, smoothing the profile of investment in key public services and helping to lever in additional private investment.

Sheila Gilmore: Will the hon. Gentleman give way?

Stewart Hosie: Not just now.
	However, as a result of the decisions taken by the UK Government in 2010 in the comprehensive spending review, capital budgets available to the Scottish Government are now likely to fall by some 36% in real terms. That represents a cumulative reduction in spending power of around £4.1 billion over the period of the comprehensive spending review. The speed and scale of the cuts by this Government significantly constrain the Scottish Government’s flexibility in managing their infrastructure programme. It is vital that while ensuring the overall sustainability of borrowing—I agree with the Minister on that—Scotland’s capital borrowing facility has sufficient scale and flexibility to enable the funding of productive investments over the long term.
	The proposals in the Bill state that from 2015 the controls and limits applied to capital borrowing mean that Scottish Ministers should be allowed to borrow up to 10% of the Scottish capital budget in any year to fund capital expenditure—£230 million in 2014-15—and that the overall stock of capital borrowing could not rise beyond £2.2 billion. They also state that borrowing to finance capital funded by a loan from the national loan fund would be for a maximum of 10 years, but that a longer time frame—for example 25 years—may be negotiated if that better reflected the life span of associated assets such as with the new Forth crossing.
	In the written statement of 13 June, the Chancellor and the Secretary of State proposed:
	“bringing forward to 2011 pre-payments, a form of cash advance, to allow work on the Forth replacement crossing”
	and
	“introducing a power in the Scotland Bill that will enable the Government to amend, in future, the way in which Scottish Ministers can borrow”—[Official Report, House of  Lords, 13 June 2011; Vol. 728, c. 58WS.]
	including through the provision of bonds. Notwithstanding any of that, the £2.2 billion cumulative limit is unchanged.
	I am pleased that there is now established consensus among the Scottish Government, the Scottish Parliament, the House of Commons Select Committee on Scottish Affairs and a number of independent experts that the Scotland Bill’s proposals for capital borrowing require substantial enhancement and improvement. That unanimity was reflected in the motion that was agreed unanimously on 9 June in the Scottish Parliament. I make this criticism of the proposals even with the changes regarding our attempt to have capital borrowing devolved so that limits, bond issuance and all these matters are agreed between the Governments on a statutory basis. At the moment, the Bill is predicated on a framework that appears to have been developed without any explicit discussion about sustainability or affordability and without offering any objective means of testing those essential criteria. The annual borrowing limit of 10% of capital departmental expenditure limit seems arbitrary and the proposed total limit on borrowing, set at £2.2 billion, is believed to be too low to make a meaningful difference. Indeed, I think that the Scottish Parliament Scotland Bill Committee in Holyrood suggested £5 billion. The
	UK Government have not proposed any objective criteria to determine the path of total capital borrowing capacity over time and that builds uncertainty and discretion into the framework. The arbitrary mechanism that the UK Government have proposed for revising this is inconsistent with the basic principles of devolution. The central assumption of a 10-year repayment period for capital borrowing is inappropriate, as public capital assets will typically have a useful life of perhaps more than 30 years. Although helpful, the early implementation measures will do very little to offset the cumulative £4.1 billion reduction in capital expenditure.
	The changes are welcome, but we believe that the UK Government’s proposals still require improvement in four key areas. First, the specification of annual limits on borrowing should be agreed between the Governments and not set arbitrarily. Secondly, the methodology for determining the borrowing capacity that is sustainable in the long term needs to be agreed. Thirdly, the terms of repayment for capital borrowing need to be agreed and, fourthly, the impact of the early implementation measures that are proposed also need to be looked at and agreed properly. We believe that should be done within the framework of a statutory agreement between the two Governments, and that is the purpose of the various amendments and new clauses we have proposed. They include amendment 26, which would allow Scottish Ministers to borrow for the purpose of meeting capital expenditure without requiring the approval of the Treasury and without it being by way of loan, and amendment 27, which would mean that Scottish Ministers and the Treasury must both agree to a code of practice and framework within which these things would be agreed. Our amendment 28 would remove the measure that suggests the cumulative borrowing total should be set at £2.2 billion, so it would become redundant when an agreement was in place.
	Amendment 29 would remove subsection (10) of clause 32, which introduces the type E procedure. That subsection would not be necessary because the agreement on how Ministers are to determine and keep under review how much they can afford to borrow, the terms and conditions and the sums that may be borrowed and the limit on aggregate at any time outstanding in respect of the principle would be agreed.
	That brings us finally to commencement. [ Interruption. ] My hon. Friend the Member for Perth and North Perthshire (Pete Wishart) suggests from a sedentary position that I should keep going but I suspect that my speaking for close to an hour will be enough even for me.
	The commencement procedures cover the implementation of the Scottish rate of income tax, income tax for Scottish taxpayers, the Scottish tax on transactions involving interests in land, the disapplication of UK stamp duty land tax, Scottish tax on disposals to landfill and the disapplication of UK landfill tax. As I said on Second Reading, these provisions will come into force two months after the Bill receives Royal Assent, but they will not have any practical effect at that point because the provisions in the Bill as currently drafted include an additional step that requires the Treasury to appoint a tax year as the first year in which the income tax provisions are to operate. In the cases of SDLT and
	landfill tax. the Treasury will appoint a specific start date but the principle is the same. Until the Treasury does that the tax provisions will sit on the statute book without changing the current arrangements whereby the UK Parliament controls all aspects of income tax, SDLT and landfill tax. The House should also note that although the repeal by the Bill of the current Scottish variable rate provisions is similarly commenced two months after Royal Assent, that has no practical effect until the Treasury appoints a tax year as the last tax year in which SVR operates. That might have been affected by earlier amendments, and I wait to hear what the Minister says about that. That two-stage approach to commencement is highly unusual and the practical effect is that the tax proposals will operate only when the Treasury decides.
	The powers conferred by the Bill on the Treasury to appoint start dates are not subject to any parliamentary procedure and, indeed, will not even be publicised by means of statutory instrument, so the processes for bringing the tax provisions of the Bill into effect do not require the consent of the Scottish Parliament, Scottish Ministers or even Westminster. I believe that is a fundamental flaw. We believe that there must be a role for the Scottish Parliament in particular.
	The Scottish Government have outlined serious gaps that remain in the Bill, and crucial details remain unknown. It is essential therefore that the Bill includes a specific mechanism to allow the Scottish Parliament the opportunity to consider the Scotland Bill proposals before they are brought into effect. Our amendments seek to make changes to the commencement provisions of the Bill to ensure that the tax provisions cannot be brought into effect unless the Scottish Parliament has specifically consented. As I said on Second Reading, there are a number of examples in which assent from Scottish or, indeed, Welsh Ministers, Parliaments or Governments is required before all-UK legislation can be invoked or rolled out properly.
	These amendments are on corporation tax, excise duties, capital borrowing and commencement. The first three are part of a package of six measures that the First Minister has been discussing, and I am sure he will be making detailed responses to the UK Government. We believe the measures are important, not to deliver full fiscal autonomy, not to deliver independence but, as we said on Second Reading and beyond, simply to make the Bill better and to remove some of its inherent flaws and weaknesses.
	I have been a long time speaking and others want to contribute. I commend our amendments to the House.

Iain Stewart: I shall speak first to my amendment 24 before making some broader comments about some of the other amendments and new clauses.
	I tabled the amendment as a probing amendment, as I felt there was still some ambiguity about one aspect of the definition of a Scottish taxpayer when it was considered in Committee. My point of concern is to define whether under clause 26 a taxpayer is resident in Scotland at the end of the day if that person is embarking on a cross-border overnight journey—one that departs Scotland before midnight and arrives in England after midnight. I think primarily of my old friend on the Caledonian sleeper, whom I cited in Committee. If the train leaves Glasgow
	and has crossed the border before midnight, is he deemed to be in Scotland or England at the end of the tax day? The point may seem trivial, but for someone who makes that journey regularly it could be material in defining whether they were a Scottish or an English taxpayer. Obviously, it would also apply to other modes of transport, such as private or heavy goods vehicles and overnight coaches.
	It is a probing amendment and it may not offer the most specific or elegant definition, but I tabled it to find clarity. I shall be happy not to press it if alternative wording can be found, or the Minister can give clarity in case the definition is ever challenged in court. I shall return to that point briefly at the end of my comments.
	I shall speak briefly to new clause 8 and the related amendments tabled by the right hon. Member for Birkenhead (Mr Field) and others. I suspect that one of our show-stopping debates tonight may be on the Barnett formula and related matters. When I looked at the amendment paper, I thought I would be following the right hon. Gentleman and responding to his points, but I shall have to anticipate his arguments from the interventions and from the new clause itself.
	They are a beguiling set of amendments. I agree that at some point we shall have to tackle the whole issue of the Barnett formula and the fiscal relationship between all parts of the United Kingdom. [ Interruption. ] The hon. Member for Na h-Eileanan an Iar (Mr MacNeil) invites me to give a solution. If he bides his time—

Angus MacNeil: I said we have a solution.

Iain Stewart: I know, but I believe I have a better one and I shall turn to it in a moment.
	The arguments are beguiling. The hon. Member for Vauxhall (Kate Hoey) said that she has correspondence from constituents asking why on the face of it Scottish residents have a much better deal from the UK public purse than people in England. I receive similar letters asking why prescriptions are free north of the border, but there is a charge in England. That issue has to be tackled.

Angus MacNeil: Among that raft of questions, has anyone ever asked the hon. Gentleman why the social security spend is higher per head in England than in Scotland?

Iain Stewart: I challenge the hon. Gentleman’s facts, because in preparing for the debate I read that often-thumbed document GERS—Government Expenditure and Revenue Scotland—and the Treasury’s public expenditure statistical analysis, which show, if my interpretation is correct, that social security payments are higher per head in Scotland than in England.

Fiona O'Donnell: Could the hon. Gentleman rise to the challenge of explaining to his constituents why there may be different charges for services between one local authority area and another? If that can be explained, surely the choices made by the Scottish Parliament and Government can also be explained to his constituents.

Iain Stewart: Indeed. If the hon. Lady will let me develop my argument, I shall address those points. There is a lot of misinformation swilling around and we need to arrive at hard evidence-based data so that we can make objective decisions about the future fiscal relationship between the different parts of the United Kingdom.
	One of the misleading things is that we often talk about changing the Barnett formula as if that was the whole fiscal relationship between the different parts of the kingdom. In fact, it is a convergence formula; it was designed by Lord Barnett to diminish the difference between Scottish and English public spending over time. The reason why people complain about the formula is that so many elements of public spending are negotiated separately from the formula. Last week, there was an instructive debate about the formula in the other place and I remind Members of the comments of Lord Lang, a former Scotland Secretary. He said that between 2000 and 2002 the Barnett elements of the public expenditure rounds diminished the Scottish block by £17 million, but the total increased by £340 million because of separately negotiated arrangements.

Angus MacNeil: Was any mention made in that debate of the massive defence underspend in Scotland, which is a huge section of public spending where Scotland receives dramatically less than its per capita share compared with the rest of the UK? [ Interruption. ] I would say more if I was not being heckled by the hon. Member for Glasgow South West (Mr Davidson).

Iain Stewart: If the hon. Gentleman has a little patience, I shall come to what I believe is the solution.
	I fear that new clause 8 and the related amendments are a little hasty in dealing with this matter.

Frank Field: What about the Union?

Iain Stewart: The Barnett formula has not been in operation for the duration of the Union and only since 1978, so it is a comparatively new beast.
	Yesterday, the right hon. Gentleman was speaking in the debate on the Pensions Bill where one of the arguments against the changes the Government are proposing is that the time scale to allow people to adjust their behaviour should not be less than 10 years. A similar approach should be taken to funding; there should be a process of evolution, not revolution. If we rush too hastily into the argument on the basis of misinformation, we risk splitting the Union asunder.

David Mowat: My hon. Friend is right. If a change is made to the block grant, as it must be at some point soon, there will be a long transition period, which may be as long as 10 years, but that is no reason not to do a review, put the matter on a needs basis and start that 10-year period. A transition of 10 years is reasonable.

Iain Stewart: I am grateful to my hon. Friend. I have a suggestion to make about how we can move forward. In this country we have never had a territorially based system of taxation or spending. From taxation receipts we do not know in detail which part of the United Kingdom contributes what in taxes. There are many estimates and forecasts, but there is little hard evidence.

Angus MacNeil: rose —

Iain Stewart: I will give way to the hon. Gentleman in a moment. His party, in calculating Scotland’s share of the United Kingdom’s tax receipts, has used very different formulae and assumptions over the years. I do not have the exact figures to hand, but in the space of a few months it came up with a figure for Scotland’s surplus, if that is what it was, which varied by several billion pounds because it used different assumptions in calculating Scottish tax receipts. That is the problem that we have in calculating the true relationship.

Angus MacNeil: Over and above tax receipts, disaggregated spending might be a lot easier. Does the hon. Gentleman believe that Departments such as the Ministry of Defence should provide full figures on how much they are spending in which parts of the United Kingdom? The Government have the power and authority to do that. We have many concerns about the shipyards in Glasgow and about defence spending. As a member of the governing party, does the hon. Gentleman feel that he should be encouraging his side to provide openness and clarity on these vital issues?

Iain Stewart: I am happy to come to some agreement with the hon. Gentleman. My solution is to provide a detailed breakdown on a territorial basis of actual spending and receipts—what is spent and received by each part of the United Kingdom.

Ian Davidson: I understand the point that the hon. Gentleman is making, but with reference to the different parts of the United Kingdom, does he accept that there are enormous divergences among different parts of England, and that that is fuelling much of the sense of grievance felt by many of our English colleagues? Much of this is a within-England problem of unfair distribution, particularly to the north-east and the north-west of England, which ought to be addressed by his Government.

Iain Stewart: The hon. Gentleman anticipates my next point exactly. It is too crude to look at the four constituent nations of the United Kingdom. In Scotland and in England we need to break that down further and look, as he says, at the different needs in the different parts of the kingdom. I will give a constituency example. My constituency, Milton Keynes South, is in the affluent south-east of England, yet I have very deprived wards in my constituency. Taking health spending as an example, what Milton Keynes is allocated as its formula share of health spending in England is capped because there is a transfer to other parts of England. I contend that that is not fair and it disregards some of the areas of need in my constituency, but it illustrates the problem that arises if the formula for analysing spending is too crude.

Mark Lazarowicz: As the hon. Gentleman knows, spending per head in London is almost 50% higher than in the south-east region of England. No one disputes that there are parts of London where there is great need, but other parts which do not fall into that category still benefit from Government spending which is 40% higher than in his constituency.

Iain Stewart: The hon. Gentleman makes a good point. In calculating these figures, however, we should be careful about looking only at per capita spending. Again, I believe that is too crude. It is about the equality of service provision. In a rural area, the cost per head of providing a school place will inevitably be higher because the fixed costs of a building, for example, are divided by a comparatively smaller number of people.

Mike Freer: Does my hon. Friend accept that allocating funds simply on geography, particularly defence spending, is a misdirection? Defence spending must be based on the strategic needs of the armed forces, not on a geographic spread. Does he agree that that line of argument is completely false in the context of defence spending?

Iain Stewart: My hon. Friend makes a very good point. We also have to look at the equality of the benefits given by defence spending—the protection that accrues to the whole country. It does not matter so much where the defence equipment originates if we are looking at the overall protection that the armed forces provide.

Michael Weir: The hon. Member for Finchley and Golders Green (Mike Freer) makes a valid point as regards defence. The attack on the Barnett formula is based on the fact that Scotland gets more per head, but if we take into account all spending, that is not necessarily the case because of the imbalance in the way that defence spending is allocated—so the figures are important. Where the assets are, for the purposes of this argument, may not be quite so important, but the amount of spending is very important. The economic impact of where the assets are is vital to many communities.

Iain Stewart: I am grateful to the hon. Gentleman for his point. May I infer that he is happy to retain the Trident base in Faslane, given the economic benefits that accrue to Argyll and Bute and West Dunbartonshire?

Michael Weir: There is little or no economic benefit from the Trident base, and there is an extremely disproportionate —[ Interruption. ] The point is that bases such as the RAF bases in Morayshire are important not only from a defence point of view but economically, and bases such as the Condor base in my constituency are important economically and also from a defence point of view.

Iain Stewart: I challenge the hon. Gentleman’s assumption about the lack, as he sees it, of economic benefits. I also contend that he is making a good case for Scotland's remaining part of the Union, so that the lion’s share of UK defence assets can be based north of the border.

Angus MacNeil: As part of the Union, Scotland currently has a manifest defence underspend. There is no defence advantage for Scotland of being in the Union at all; we are actually losing money by being part of the Union. Far more would be spent on defence in Scotland as an independent country than the Union is spending there, and the shipyards in Glasgow would be in a far better state with an independent Scotland than with a dependent Scotland represented by Labour.

Iain Stewart: I have great respect for the hon. Gentleman in many matters, but this is not one of them. The argument that defence spending in Scotland would somehow be enhanced through independence is not one I agree with. I am not sure whether the Scottish National party’s policy is still to withdraw from NATO, but it used to be many years ago. I see Scottish defence assets only being decimated in the event of independence, so I agree to disagree with him on that point.
	I will return to what I propose as a solution. Before we start recalibrating the Barnett formula or developing some other formula or mechanism, we need hard facts on the fiscal relationship between each part of the kingdom. Once we have that, we can move forward on a sensible basis towards having a stable and fair system in the UK. However, I will end on a note of caution. In a previous exercise I looked at other countries that operate some form of fiscal transfers between different parts of the country, such as Australia, Canada and Germany. There are different models in each country, but in all of them the spending relationship between the constituent parts is still a big political issue. I fear that we will never get to a point where everyone is completely happy with the relationship, but I believe that we can arrive at a stable solution.

Ian Davidson: It is important to put on the record that even under devolution Glasgow clearly gets far less than its fair share from a Scottish Government based in Edinburgh. I have just been to the Shetlands with the Scottish Affairs Committee, and people there feel that they are equally badly treated by Edinburgh. We also need a needs-based assessment within Scotland to stop money disappearing and being sucked down into the black hole that is Edinburgh.

Iain Stewart: Having been born and brought up in Hamilton, which is between Glasgow and Edinburgh, I am in something of a no man’s land on that point and wary of intruding on private grief. The hon. Gentleman’s point is an important one. The analysis should be not only among Scotland, England, Wales and Northern Ireland, but among the regions and cities in each nation. I do not intend to press my amendment to a vote, but I would be grateful if the Minister could suggest some alternative working or make some statement.

Russell Brown: Will the hon. Gentleman give way?

Iain Stewart: One very last time.

Russell Brown: I thank the hon. Gentleman for giving way. My intervening on him is causing disruption behind me. Will he look again at his amendment and explain exactly what it means? I am a little perturbed, and I know that he has mentioned sleeper trains and everything, but will he explain again exactly what it means?

Iain Stewart: My amendment is very simple and would remove any ambiguity. If a passenger were on a cross-border overnight journey, irrespective of when the border was crossed, they would be deemed to be in Scotland at the end of the day when that service departed. It may not be the most elegant or precise of solutions,
	but I felt that in the debate in Committee there was some ambiguity about the position, so the amendment is my attempt to clarify it.

Angus MacNeil: Will the hon. Gentleman give way?

Iain Stewart: Forgive me, but I am going to finish now. Many other Members wish to speak, and I look forward to the Minister’s comments.

Ann McKechin: I welcome the very wise remarks of the hon. Member for Milton Keynes South (Iain Stewart). He always provides us with great expertise on Barnett formula issues, and on the point about having hard evidence, because one key component of our debate about the Bill has been the evidence for the various fiscal arguments that have been proffered over the past few months.
	Borrowing powers were not in the original Calman recommendations, but we certainly welcome the inclusion of that tool for the Scottish Government. The Scottish Parliament’s Scotland Bill Committee, in its report, and the Select Committee on Scottish Affairs both recommended that the powers be brought forward from the proposed date of April 2013, and as the Minister will be aware, we have already called for their advancement to 2012. That proposal is in amendment 2.
	The Government announced in last week’s written ministerial statement that they are to bring forward to 2011 pre-payments, in order to allow work on the Forth replacement crossing. That is not the same as bringing forward the capital borrowing powers in the Bill, and it would be helpful if the Minister in his winding-up speech were able to confirm that the full capital borrowing powers will be available from the next financial year, if the Bill is on the statute book by that point.
	I also welcome the announcement in the statement that the Government are removing the requirement for Scottish Ministers to absorb the first £120 million of tax forecasting variation within their budget, giving them greater flexibility. A number of comments have been made about extending the borrowing limits, and that should be a matter of negotiation between the two Administrations. The Secretary of State says that he views the figure of £2.2 billion as a floor rather than as a maximum, and that is welcome.
	My right hon. Friend the Member for Birkenhead (Mr Field)—

Kate Hoey: He’s gone to the loo.

Ann McKechin: My right hon. Friend and my hon. Friend the Member for Vauxhall (Kate Hoey), who I understand has reached a memorable birthday, spoke to new clauses on the Barnett formula, and the hon. Member for Milton Keynes South and others pertinently said that there is no easy solution.[ Interruption. ]I am pleased to see that my right hon. Friend has returned to his seat. In the financial year 2009-10, however, the average per capita expenditure in Scotland was £9,940, while in London the figure was £10,182. Indeed, it has been stated that the move to a needs-based system in countries such as Australia has resulted in the same amount of debate about what is required.
	Barnett should not be confused with devolution. Devolution allows the Scottish Government to make their own decisions on a range of issues, such as prescription charges, which do not apply in England, but it is separate from Barnett formula issues. The Barnett formula is relatively simple and objective, and as the Calman commission stated, any changes to it would be difficult to determine and “a highly political process”.
	On the new clauses on corporation tax, for the record the hon. Member for Dundee East (Stewart Hosie) spoke about fiscal autonomy for 42 minutes, not 14. However, we are not necessarily any clearer about what impact his proposals would have on the electorate in Scotland. The Calman report specifically rejected the devolution of corporation tax. Paragraph 3.113 of the final report says that
	“we therefore reject the devolution of corporation tax. Nor, especially in view of its volatility…from one year to another, do we see it as a candidate for tax assignment.”
	This matter was raised in an interesting report on Scottish economic growth issued this week by the Centre for Public Policy for Regions, which states:
	“The research findings on the issue of the relationship between fiscal autonomy (or decentralisation) are neither consistent nor robust. Overall, the most important finding is that there is no simple and robust relationship between fiscal decentralisation and economic growth.”
	It also states:
	“The traditional drivers of economic growth tend to concentrate on microeconomic factors (such as innovation, R&D, entrepreneurship, and knowledge-based assets in general) as the key determinants of productivity…To a large extent, the policy levers available in this area have been within the control of the devolved Scottish Government since 2000.”
	Instead of giving us an ill-defined list of extra powers, it would be helpful if SNP Members and their colleagues in the Scottish Government could specify how they wish to use their existing powers to increase Scotland’s economic growth and productivity.

Mark Lazarowicz: No doubt there is a theoretical argument that cutting corporation tax for smaller or new businesses would encourage them to grow and expand, but can my hon. Friend explain how cutting the corporation tax paid by Royal Bank of Scotland by 50% would encourage it to bring more jobs into the Scottish economy? Would it not just add to its already large profits?

Ann McKechin: My hon. Friend raises a good point. The Scottish Government are advocating a cut in taxes for banks but not for small businesses that do not pay corporation tax. Many employers in the private sector who employ many people do not pay corporation tax, but income tax. Substantially reducing corporation tax would lead to a large cut in public expenditure or increase the burden on income tax payers.
	The Scottish Government already have a considerable number of economic levers. They have decided to cut funding to many Scottish colleges—for example, James Watt college in Greenock faces a cut of £5 million. They have cut regeneration funds in many of the most deprived areas, including a 71% cut in the Inverclyde regeneration fund. The test that the Scots will apply is not how many
	powers anybody has vis-à-vis someone else but how they use them for Scotland’s benefit.
	[
	Interruption.
	]
	SNP Members chunter on, but they do not have any intervention to make because these are decisions that they have made and they do not wish to take responsibility for them.

Fiona O'Donnell: Does my hon. Friend regret the macho element that has crept into this debate? Does she, like me, regret the fact that when Alex Salmond came to Downing street with his two friends and sat down with Government Ministers, there was not a single woman around that table?

Ann McKechin: My hon. Friend raises an interesting point about the issues that the Scottish Government have decided not to speak about. They did not come down here to speak to Ministers about the cuts in the welfare reform that will impact particularly heavily on women. They did not come down here to talk about the crisis in our care homes as a result of the imminent collapse of Southern Cross, which affects elderly people and their families right across the country. They did not come down to talk about the increase in the pension age, which will impact on women in particular. My hon. Friend is right that when it comes to issues that affect tens of thousands of people and women in particular, who make up the majority of the Scottish population, the SNP is sadly silent.

Eilidh Whiteford: The last time I looked, welfare reform and pensions were matters reserved to this House. I certainly contributed to the debates on those matters in this House, and the last time I looked I was a woman. It is sad that when we discussed the uprating proposals in the Pensions Bill, most Labour Members, with a few honourable exceptions, sat on their hands. It was left to just a few of us on the Opposition Benches to oppose the increases proposed by the Government.

Ann McKechin: I do not discredit the hon. Lady for making strong statements in this Chamber. However, I find it extraordinary that the First Minister, who feels that he can speak about any issue that impacts on Scotland and who has more powers, does not take the opportunity to speak about the issues that matter to ordinary people in Scotland every day of the week.
	I will return to the Bill, as I am sure you would wish, Madam Deputy Speaker.

Angus MacNeil: Will the hon. Lady give way?

Ann McKechin: The hon. Gentleman is jumping up to speak.

Angus MacNeil: Will the hon. Lady clarify whether she is saying that she would welcome the First Minister coming to Downing street to talk about welfare reform and pensions?

Ann McKechin: If the First Minister had anything sensible to say, I would, but as yet, I have not heard it. It is a bit like the corporation tax issue—[ Interruption. ] The hon. Member for Na h-Eileanan an Iar (Mr MacNeil) needs to calm himself and not get over-excited. The Scottish Government have had many weeks to produce detailed analysis. They have complained that things
	have been rushed and that we have not had figures from the UK Government on a variety of issues throughout the passage of this Bill, yet they cannot produce the detailed evidence and analysis that would allow people in Scotland to judge whether their calls have validity.
	The hon. Member for Dundee East was given five opportunities this evening to explain what the impact would be on Scottish public expenditure if there was a cut in corporation tax. He said in Committee:
	“I would like it cut over a number of years”.—[Official Report, 14 March 2011; Vol. 525, c. 70.]
	Members may be interested to hear that that has not always been the Scottish National party’s policy on corporation tax. In 1988, a certain Alex Salmond was suspended as an MP from the House of Commons for attacking the Tory Government’s reduction in corporation tax.

Pete Wishart: I am grateful to the hon. Lady for the history lesson. Is this what we are going to get from the Labour party for the next few years? I want to encourage her, because the negativity and can’t-do attitude that has permeated the Labour party is partly responsible for the overwhelming defeat that it suffered at the Scottish elections. Please carry on.

Ann McKechin: If that is the level of intellectual debate that we can anticipate from the Scottish Government and their colleagues at Westminster over the next five years, I think Scotland will be in a pretty poor state. Of course, we now have a hierarchy in the Scottish Government depending on whether one is a good Scot or a bad Scot. That is a level of debate that extends even up to judges in the Supreme Court.
	If corporation tax was cut in Scotland, public spending would have to be cut in line with it, as we have heard today. The hon. Member for Dundee East suggested that the Scottish Government would take the power, but apply the same rate. That suggests that the power would not provide any benefit or disbenefit, except that they would have to administer the tax at a cost. At some point in the future, they would then apply the tax.
	There are questions to which people in Scotland want answers. By how much would the Scottish Government cut corporation tax? The hon. Gentleman spent 42 minutes talking this evening and did not confirm that figure once. What would be the time scale for the cut in corporation tax? Would it be done over two years, three years or four years? We do not know. That is despite the fact that the Treasury, in its evidence to the Scotland Bill Committee in Holyrood in March, stated:
	“A 10% cut in corporation tax in Scotland might cost about £600 million per year for an indeterminate period.”
	That is understandable given the maturity of the Scottish economy and, as the Exchequer Secretary mentioned tonight, the many large plcs that already have their registered offices in Scotland. Even Northern Ireland’s First Minister, Peter Robinson, believes that Northern Ireland is a special case and has warned Alex Salmond that Scotland could lose up to £1.5 billion if it follows through the bid to set its own corporation tax. Anyone would need answers to the questions I have asked if they are to decide that that is a good idea.
	The SNP is reluctant to say whether it thinks Scotland should be a high-tax nation or a low-tax nation. Does it believe in high-quality, good value public services, or does it want a lower public expenditure base, which would mean fewer nurses, doctors and police? There are consequences to that. Does it want an increase in income tax? [Interruption.] The hon. Member for Na h-Eileanan an Iar chunters about scaremongering, but he has failed to answer any of those questions. He should feel free to educate us about the detail of the SNP proposals.

Fiona O'Donnell: May I issue a word of caution to my hon. Friend about encouraging SNP Members to talk for any longer? The hon. Member for Perth and North Perthshire (Pete Wishart) said in his opening remarks that he could talk for days and days about the Bill. Is that not exactly the problem? Every hour the SNP spend talking about these ideas in the House is an hour when we are not talking about the issues that the Scottish people really need us to address.

Ann McKechin: I can understand my hon. Friend’s frustration. It is disappointing that the SNP has not taken the opportunity this evening to provide an explanation and analysis of why they think the change would be helpful.

Eilidh Whiteford: Will the hon. Lady give way?

Ann McKechin: I would like to continue this point.
	Does the SNP believe that a further tax cut for banks, which pay the majority of corporation tax in Scotland, is a progressive policy? Does it believe that there should be a shift from corporation tax to personal income taxation, as has been the case in Switzerland, for example?

Angus MacNeil: That’s a poor country, isn’t it?

Ann McKechin: Actually, there has been very little increase in growth in Switzerland. There is no direct correlation, and the evidence is weak.
	As I have said previously, and as a report that came out this week clearly indicated, many different levers of economic growth are already in the hands of the Scottish Government, but they have either chosen not to use them at all, or when they have chosen to use them it has had a detrimental effect as well as sometimes having advantages.

Eilidh Whiteford: rose—

Ann McKechin: The Scottish Government have to make those choices, and like my hon. Friend the Member for East Lothian (Fiona O'Donnell), I would like to get on with the businesses of discussing how they are going to use their powers, what they intend to do with them and how they will benefit people. Instead, the SNP has obsessed over process for an indeterminate period. [Interruption.]

Dawn Primarolo: Order. The hon. Member for Banff and Buchan (Dr Whiteford) has to resume her seat when it is clear that the person who holds the floor, in this case Ann McKechin, is not giving way.
	This is not a game, it is a debate, and it would be good if all Members in the Chamber behaved in a respectful way. The heckling is getting a little out of hand, and I am sure some Members would not like me to point out who is doing it at the moment. Perhaps we can return to the debate.

Frank Field: On a point of order, Madam Deputy Speaker. Do you think it possible that by 10 o’clock, I might actually get the chance to speak to my amendment, which has already been dismissed by the Government and debated by other people?

Dawn Primarolo: That is not within my gift, Mr Field, but let me say that I sincerely hope so.

Ann McKechin: I certainly hope that my right hon. Friend will have the time to do so, and I hope to conclude my remarks fairly shortly, but I wish to move on to the amendments on excise duty.
	The issues relating to excise duty constitute a relatively new demand since the completion of proceedings in Committee. They were not part of the discussions of the first legislative consent memorandum Committee, but will doubtless be discussed in detail by the second LCM Committee. I would welcome further analysis of the proposal’s methodology.
	The Finance Minister in the Scottish Government, John Swinney, was questioned about the proposals on the BBC “Politics Show” on 22 May. He was asked, again five times, how the proposal to devolve excise duty in Scotland would work in practice and what steps would be required to stop the inevitable cross-border traffic if alcohol were suddenly cheaper in Carlisle than in Gretna. It was also pointed out to him that tax is collected not at the point of sale but when it leaves the excise warehouse. Given not only that all Scotch whisky comes from Scotland, but that Scotland accounts for 75% of the UK’s gin and vodka production—indeed, Diageo in Fife produces all the Gordon’s gin and Smirnoff vodka that one may see in shops throughout the UK—there are serious questions about how the proposal would work, the cost of administration and how tax avoidance and evasion would be tackled.

Stewart Hosie: Notwithstanding the hon. Lady’s questions, do I take it from her answers that she sees some potential to remove the obstacle that Labour in Scotland found to minimum pricing? The Labour party’s argument was that an increase in only the retail price went straight to the UK Exchequer and did not benefit the economy generally or the Government in tackling some of the consequences of drinking cheap alcohol.

Ann McKechin: The hon. Gentleman is right to raise the serious problem of alcohol consumption in Scotland. As the Labour group in Holyrood pointed out, simply raising the price and allowing supermarkets to retain the surplus—I think that that was the Scottish Government’s first plan—was neither popular nor logical.
	However, it is important to note that excise duty is now subject to an escalator above inflation. The Labour Government introduced it before the general election so that excise duty increases above inflation. Although,
	following the recession, as might have been anticipated, consumption in England dropped, that has not happened in Scotland to the same extent. There is a significant difference between consumption in Scotland and average consumption in England, despite the identical price and range of products.
	Price sensitivity does not seem to apply in Scotland to the same extent as it does in England. That suggests that cultural and social issues are predominantly behind the problem. I do not derive any satisfaction from that. It would be much easier if we could say that a simple price escalation would lead to a reduction in consumption. However, the evidence to date has not shown that that would happen. Indeed, the medical evidence shows that the unit cost would have to be considerably higher than that in the Scottish Government’s proposals to make any impact. Obviously, that would have an effect on the drinks industry, particularly given that much of it is located in Scotland.
	The subject is serious. The Scottish Government already have a range of levers at their disposal. The one for excise duty is exceptionally complex and I do not think that the argument for it has been made. Certainly, more needs to be done, but it needs to be based on hard evidence. We also need to realise that some of the things that we would like to do and that we think could work might not be sufficiently strong to make an impact. We might have to reconsider our proposals.
	I appreciate that the Scottish Government have begun re-examining the issue because I think that they recognise that providing money to supermarkets was not the way forward. However, the issue is much wider and requires several different measures. The power to ban drink discounting, which the Labour group supported, is already on the statute book in Holyrood. That has still to go ahead. I therefore hope that the Scottish Government will enforce the legislation that they already have on the statute book.

Angus MacNeil: First, I observe that on the minimum price of alcohol, the SNP minority Government were supported by a range of professional opinion. However, is not the hon. Lady’s point on the differences between alcohol consumption north and south of the border an argument for pricing within cultures, as opposed to uniform, blanket, one-size-fits-all pricing?

Ann McKechin: The hon. Gentleman must recognise that the cost of alcohol has increased by slightly more than inflation over the past 20 or 30 years, when, of course, the increase in incomes has been much greater. The Government’s ability to control that gap is limited.
	The other problem is that the total price of alcohol is, to a large extent, made up of different forms of tax. When we increase taxation to more than a certain level, we find that there is an increase in black market sales, as we found when we increased taxation on cigarettes. I do not discount the fact that price can have a bearing on consumption, but the evidence to date in Scotland presents us with a much more complex problem, much of which is about cultural and social values. They are the only things that can explain the difference in consumption north and south of the border. The regimes of alcohol selling are more or less the same, but there is increased drinking at home rather than in public houses. The problem is complex, and a range of measures must
	be put in place to deal with it. My Labour colleagues certainly want to make changes that will make an impact, and they are prepared to have a serious debate.

Stewart Hosie: Finally on that point, and for the sake of completeness, I am sure the shadow Secretary of State would want to confirm that all 17 of Scotland’s public health directors supported minimum pricing, as did the four UK chief medical officers, the British Medical Association, the royal colleges, the Association of Chief Police Officers and many others, including Tennent’s, Molson Coors and Tesco. They saw minimum pricing as an important part of the solution to the problems in Scotland.

Ann McKechin: The supermarkets might well have supported minimum pricing because they would receive a good degree of financial benefit from it. However, some medical experts said that on the evidence, the price per unit would have to be a great deal higher than that proposed by the Scottish Government to have an impact. As I said, although the increase in the excise duty escalator, which the UK Labour Government introduced, has had an impact south of the border in reducing consumption, it has not had the same impact in Scotland. Price sensitivity seems to be different north and south of the border, and there are different patterns of consumption. The focus must be on cultural and social values as much as on simple economic values.
	On that basis, there are considerable complexities in any such proposals. The Government’s proposals would have an adverse impact on the drinks industry, which has a substantial bearing on the Scottish economy, but the argument for them has not been made.

Frank Field: I rise to move new clause 8 and the consequential amendment 23, which stand in my name and the names of my hon. Friends.

Dawn Primarolo: Order. I am sorry to interrupt the right hon. Gentleman, who has waited very patiently for his opportunity to speak, but what he is doing at the moment is “speaking to” his amendments. He is not formally moving them, which would cause a few problems.

Frank Field: Whatever that means, I shall try to move on, Madam Deputy Speaker. I am grateful for that.
	I wish to speak to new clause 8 and amendment 23, but I sense that I am interfering in a family row between different factions. As clearly as possible, I want to put the English case, which seems to be lacking in the debate.
	This is the first time I have wanted to join in a debate on Scottish matters in the House. That is my fault, though, and I assure my hon. Friends that I will not let it happen again—I now wish to pursue Scottish matters whenever they arise. I have been struck today, listening to a Scottish debate for the first time, by how many of us—myself included, perhaps—failed to think through what devolution meant, and now we have almost hit an invisible brick wall past which we cannot get our arguments.
	It seemed to me from observing the recent Scottish elections—obviously my sympathies lay with the party I have the honour to represent in Parliament—even from the language used by English politicians contributing to the Scottish debate that we had not thought through what the limited measure of devolution would mean. We got a pretty good hiding for our trouble on that score. I plead with the Labour Front-Bench team—this is meant as an encouragement, because I know that, as part of our policy review, they are thinking through what should necessarily follow from a defeat on the scale of the one we suffered at the last general election—not to go into the next general election without seriously thinking about the consequences of devolution, not just for Scotland but for the other parts of the United Kingdom, particularly England, where my seat is situated.
	I have also been struck by the fact that although people try to mystify us by using various formulas and by saying, “What was given with one hand is taken by another”, I cannot answer, in the light of this debate and the work I have done, the charge put to me by a constituent of mine during the half-term break, when I visited the Scottish Parliament, which is a magnificent building—the extraordinary scale of the domestic architecture was incredibly grand. A constituent of mine greeted me as I went in and asked, “Why is it, Frank, that if I lived in Scotland, I would have free medicines, free long-term care and my children would go to university without paying the fees they pay in England?” Despite all the talk about grants and how we might review them, there is no reply yet to our English constituents on those points. If the explanation is not an unfair distribution of Exchequer grants, I want to know what we have in England that Scotland does not have that might pay for those extraordinary benefits.

Angus MacNeil: The right hon. Gentleman is making an interesting speech and has raised a fascinating point put to him by a constituent of his whom he met in the Scottish Parliament. The only immediate answer I can find to the question he has put to the House about the difference between politics north and south of the border is the existence of the SNP and what it contributes to politics in Scotland.

Frank Field: I said, Madam Deputy Speaker, that I was anxious to speak briefly so that other people might be able to contribute—after waiting many hours—so I will not go down that route. However, the hon. Gentleman knows that his is not the answer.

Russell Brown: I want to put the record straight for my right hon. Friend and his constituents. He talks about free prescriptions in Scotland, which we now have, but I hasten to remind him that there was a period of two to three years when people south of the border with cancer-related problems got their medication free, while people in Scotland were paying for their prescriptions. This is about priorities. The Labour Government rightly made that decision, and it was just a shame that the Scottish Government did not follow suit at the time.

Frank Field: Much as I admire my hon. Friend, I obviously should not have given way, because he is distracting me from the argument that I wish to make, which is a simple one. I am not convinced of the basis for those
	differences, and neither are many of my constituents. I have affection for the way our different nations have been grouped into the United Kingdom, but I am anxious, because unless we start to face these questions and answer them soon a general sourness will enter into English politics, and we will not be able to judge where that sourness will lead us.
	In particular, I fear for the electoral standing of my party if it continues to feel, as many do now, that the Scottish Labour party tail wags the English Labour party dog. We stand in danger of being marked indelibly as a party in England that is not prepared to protect or to promote the English question. My new clause 8, which I know others wish to support, makes a plea: that we should move as quickly as we can to a position from which those on the Treasury Bench can spell out what the basis of the allocation of the main grants between the constituent parts of the United Kingdom should be, and, if there are differences, how we can defend them to our constituents on the basis of fairness—something that they feel in their guts—which is not possible at present. If we cannot do that, we should not envisage shortly—because these Parliaments move amazingly quickly towards their close—going into a referendum debate in Scotland about independence, or not until we have spelt out those differences and the logical basis for them, and can defend them to our English constituents.

Pete Wishart: The right hon. Gentleman is making a thoughtful speech and a fine contribution, but I am sure that when he talks to his constituents he will want to ensure that they have the correct facts about this argument. Will he at least acknowledge that there is a debate about relative spending between the rest of the United Kingdom and Scotland? Oxford Economics, for example, found that when unidentified spending is factored in, London and Northern Ireland receive more money than Scotland. Will he at least accept that there is an argument?

Frank Field: I might accept that there is an argument; my plea is that the information should be set out clearly for us, so that we can understand if there are differences and, if there are, establish a basis on which they can be defended. If I manage to conclude fairly quickly, I know that there are Members on the Government Benches who have written and spoken about the need for us to move expeditiously to a needs-based formula, although we all understand that if we did that the period in which we phased in the new formula would be crucial. I am not in favour of doing things that rough people up unnecessarily; timing is important.

Ian Davidson: Like the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), who spoke earlier, I think that these are important points. May I suggest to my right hon. Friend that there are two different aspects that he ought to be picking up? One concerns the allocation of money—to some extent I tried to address that when speaking to the hon. Member for Milton Keynes South (Iain Stewart), because there are divisions in England as well—but the second is the choices made by different jurisdictions. The devolved Parliament in Scotland has clearly made decisions that are different and better than some of the things done in England. However, when it
	comes to waiting lists, services and education, it is also true that some things in England are better than in Scotland. Does my right hon. Friend, like me, welcome the fact that the Select Committee on Scottish Affairs and the National Audit Office are undertaking an evaluation of
	“the progress made in various policy areas, comparing devolved Scotland to other jurisdictions”?

Frank Field: The answer to that, briefly, is yes.
	Reference has been made to the incredibly interesting debate held in the other place last week. I was struck not only by the unanimity on the view that the status quo cannot hold but by the fact that the Minister replying to the debate found it terribly difficult to marshal a case against all those contributions.

Angus MacNeil: The right hon. Gentleman has mentioned a sourness creeping into politics, which everyone wants to avoid for a number of reasons. The hon. Member for Glasgow South West (Mr Davidson) has just mentioned comparisons across the jurisdictions, and I hope that that would include jurisdictions outwith the UK. Might the right hon. Gentleman find a solution to his problem in full fiscal autonomy, with spending fully correlated to the ability to raise money? After all, I am sure that his constituents do not want to talk to him about the spending in the Isle of Man, Ireland, Norway or Denmark. They feel a grievance because they perceive an over-closeness in the relationship with Scotland, and that relationship would become healthier with a little more distance.

Frank Field: I shall answer that intervention and finish on that very point. We do not have the information that we require to argue these points, and the sourness could ensue when the Scottish Government hold their referendum on independence. I believe that a large force in this House will insist on other parts of the United Kingdom having a say in that referendum. Given the sourness that will result if we continue the debate in the way we have tonight and certainly before now, the irony would be that the SNP could well fail to carry the Scottish electorate with it on independence, while the English electorate would vote for it.

Alan Reid: The Bill and the Government’s new clauses will bring about a substantial increase in the taxation and borrowing powers available to the Scottish Parliament, taking the Scottish Parliament and the process of devolution substantial steps further forward. Since the Scottish Parliament was established in 1999, it has been held back by the fact that it has had very few tax-varying powers and that its role has been largely to spend money rather than to raise it. By giving it these extra powers, we will increase its democratic accountability.

Angus MacNeil: Surely there is more to it than that. I often hear politicians and certain sectors of the media talking about democratic accountability, but is not the bigger issue the need to ensure that we have Governments, in whatever country, who are capable of influencing the economy so that it can grow? More important than politicians being accountable are people having jobs and the economy growing, so that we can live in a more prosperous society.

Alan Reid: Yes, that is certainly very important, and the Scottish Government already have economic development powers. Giving them these tax-varying powers will allow them to choose to use the proceeds of taxation for economic development.

Angus MacNeil: Is not that argument similar to a golfer being told, “Of course you can go and play a round of golf, but you’re only getting a putter to play with”?

Alan Reid: The Scottish Parliament already has more than a putter, and the Bill will give it a lot more clubs in its bag.
	I support the Government’s new clauses. I listened to the hon. Member for Dundee East (Stewart Hosie), who appears to have left us, and I conclude that he has not made a case for his amendments. I want to compare the SNP’s approach to that of the other parties in Scotland. The other parties all worked together within the Calman commission and, through deliberation and working towards consensus, came up with a package of measures to give more powers to the Scottish Parliament. The Government are implementing those measures through the Bill. The SNP, however, refused to take part in that process. It has come along tonight with amendments that have no back-up papers, and it cannot make a case to back them up.
	When I questioned the hon. Member for Dundee East, I understood his case to be that if corporation tax is cut, more revenue will come in. As I pointed out in my intervention, however, assuming his case to be correct, if one part of the UK were to cut corporation tax, the other parts would be forced to follow suit and there would simply be a race to the bottom, in which businesses would not be paying their fair share of taxes. That would mean either personal taxes going up or services being cut.
	Equally, the hon. Member for Dundee East did not convince me on alcohol duties. All the practical problems were put to him and he was not able to answer them. I understand that he thinks the Scottish Government should increase alcohol duties, but if such duties were lower in England, people who lived near the border would simply travel across it to buy alcohol. No doubt when they were in the supermarkets there, they would buy other things as well, which would be a loss to the Scottish economy.

Michael Crockart: My hon. Friend makes a fine case, but it is not just the people living close to the border who would do that. A large black market would undoubtedly be created in exactly this type of goods and it would grow across Scotland and contribute to the difficulties that we have already mentioned about the country’s dependence on alcohol.

Alan Reid: My hon. Friend is correct. There would be an incentive for a white van man to drive south, fill up his white van, come up to Scotland and sell the alcohol at a profit. When I intervened on the hon. Member for Dundee East, we heard a sedentary intervention from the hon. Member for Angus (Mr Weir) to the effect that Argyll was not close to the border. However, I would point out to him that for a whole variety of reasons people from Argyll regularly visit England and, if they
	could buy alcohol cheaper there, there would be an incentive for them to fill up their car with it. That would mean a further loss of income to the Scottish economy.

Michael Weir: The hon. Gentleman is making a case, but for many years people have been going on holiday to other jurisdictions and bringing back alcohol with them; there is nothing unusual in that. The suggestion that all of a sudden there is going to be a massive influx seems to me ridiculous, especially given the cost of fuel in Argyll.

Alan Reid: But they would also fill up their cars with fuel when they were outside Argyll. The hon. Gentleman makes a point. We have heard about booze cruises to Calais, but despite the high price of fuel, it is cheaper for someone in Scotland to drive to England than to go to France. Britain has a certain degree of flexibility over its excise duties because it is surrounded by water. The one land border we have is between Northern Ireland and the Irish Republic and we have all heard the allegations of fuel smuggling. That shows it is more difficult for a country to set its own excise duties where there is a land border than it is when there is only a sea border. With a land border, setting a separate rate of alcohol duties would be difficult.
	The hon. Member for Paisley and Renfrewshire North (Jim Sheridan) mentioned that people working regularly in England would be able to take alcohol back to Scotland on the train. That led me to think about what would happen on the train itself—I can imagine the announcement on the tannoy as the train leaves Carlisle: “Get your drink now because in five minutes the price goes up”!
	To summarise, the SNP did not make the case for their amendments. Through their new clauses, the Government are giving substantial extra powers to the Scottish Parliament, so I will support the Government tonight.

Ian Davidson: I would like to speak to the amendments but also to refer to some sections of the Scottish Affairs Committee report. Like other hon. Members, I have attended many of these debates and I recognise that this is not the end of the process. We are just mid-way through it.
	My first point follows on from my intervention on the Minister about making more information available. It is essential that we try to raise the tone in these debates rather than lower it. Our debates should be based on argument and figures rather than on the yah-boo politics that we see too often in the Chamber between Scottish Members on these issues.
	Some Members may remember the “magic bullet” theory. Professors Hughes Hallett and Scott—all three of them—[Laughter]—suggested that simply devolving financial powers to Scotland would result in an automatic boost. That was seen as a panacea and a deal-breaker. Only after a substantial amount of debate did they reach a conclusion. The Select Committee report states:
	“when questioned on the relationship between the devolution of fiscal powers and economic growth, Professor Hughes Hallett said that: ‘the empirical evidence is inconclusive on the question of whether it does or doesn’t lead to an increase in the growth rate
	systematically. Some studies say yes, and some studies say no’… Professor Scott stated clearly, however, that ‘the actual act of giving power does not in itself create a bonus’.”
	The exchanges that resulted in that conclusion advanced the debate considerably, and I think that many other matters that we have discussed, such as corporation tax and excise tax, ought to be dealt with in the same degree of detail.
	When our Committee produced its report, we said that we were conscious that the misuse of figures resulted in a sense of manufactured grievance which suited some participants in the debate. The way in which to defeat manufactured grievances is to produce accurate figures, and I think that the Government have been slow in producing the full details and slow in producing the facts.
	One of the main issues identified by the Committee, which is relevant to some of the new clauses and amendments, is the key principle of transparency. Another is evolution. We need to recognise that the Scotland Bill, and the relationship between Scotland and the rest of the United Kingdom, will constantly evolve. Most people in Scotland believe that an obsession with constitutional detail has diverted attention from real issues on which there is not nearly as much division as many suggest. On a number of issues there is substantial common ground between the nationalists, Labour and the Liberals—the Tories, of course, are beyond the pale—but that is often masked by the obsession with small difference.
	At the last moment, points about such matters as excise duty have been produced like rabbits out of a hat. There may not be much division between us in terms of the objectives that we wish to achieve, but there may be much more when it comes to method, and more still when it comes to the interpretation of what are only partial statistics. The Committee stated:
	“Progress should not be measured solely by the extent by which powers are sucked into Edinburgh and we will wish to look at how reserved responsibilities can be exercised closer to the people they serve.”
	All bar one of its members agreed with the point that I made earlier about Edinburgh being a black hole into which powers are sucked. All who were not nationalists shared that perspective and that of the report. The issue of whether we are philosophically committed to devolution involves decentralisation beyond Edinburgh. Edinburgh is not an end in itself, except for people who happen to live there. The vast majority of people in Scotland want powers to be transferred closer to them, which does not necessarily involve Edinburgh. As people in many parts of Scotland will recognise—

Mark Lazarowicz: Will my hon. Friend give way?

Ian Davidson: Will my hon. Friend allow me to finish my point, for the avoidance of doubt? Edinburgh as a centre of government is as distant from many people in Scotland as is Westminster—or, indeed, Brussels—as a centre of government. Having said that, I shall happily give way to an Edinburgh Member.

Mark Lazarowicz: I am grateful to my hon. Friend for giving way, and I am glad that he made it clear that when he speaks of “Edinburgh” he actually means the Scottish Government and Parliament based in Edinburgh.
	Perhaps he should use that longer form in future, rather than give the impression that Edinburgh is benefiting from some largesse from the Scottish Government and Parliament, because we certainly are not.

Ian Davidson: If my hon. Friend is saying that the sucking of powers into Edinburgh has not benefited Edinburgh, things are even worse than I thought, and I will certainly take that into account in future.
	The Committee dealt in detail with corporation tax, and we also welcomed the Scottish Parliament Committee’s points on the subject. Professor Muscatelli summarised the main reason why, on balance, we came down against the devolution of corporation tax, saying:
	“tax competition was the main reason why our group recommended that corporation tax should not be devolved.”
	He made the point that it was very likely that a reduction in corporation tax in one UK jurisdiction would result in the cannibalisation of tax from other parts of the UK.

Eilidh Whiteford: The hon. Gentleman and I sat through some very long evidence sessions with any number of erudite professors of economics, none of whom seemed to agree with each other, but who nevertheless managed to find agreement on some pretty simple principles in respect of corporation tax, one of which was that if we lower it too far we will harm revenue, and if we raise it too high we will harm growth. Those very learned people disagreed because there are so many contingencies and uncertainties at any given point in time, and because the interlinking of the economies of various parts of not just the UK, but the European Union and beyond nowadays, makes it very difficult to pin matters down with any certainty, and therefore they become highly theoretical. Does the hon. Gentleman agree that—

Mr Speaker: Order. That is a very long intervention, but I feel sure that the hon. Lady is nearing her final sentence.

Eilidh Whiteford: Does the hon. Gentleman agree that the way to secure the Scottish economy is to create jobs?

Ian Davidson: Well, that is a hard one, isn’t it! Yes, clearly the way to improve the Scottish economy is to create jobs, and as far as I am aware not even the Conservatives are against that. The arguments to which the hon. Lady refers were so complex that it seemed at some points that even Hughes and Hallett were disagreeing. [Laughter.]
	We did reach conclusions, however. I think everyone agreed that there were risks in devolving corporation tax, and, as we said,
	“not least in that this could lead to competition which could result in the ‘cannibalisation’ of the UK’s tax base.”
	There was a political difference there, because we went on to say:
	“We recognise that this is not necessarily a concern for those who wish to consider the financial position of Scotland in isolation.”
	I understand why a nationalist would not be concerned about the cannibalisation of UK taxes if there were a minor gain to Scotland, but for those of us who take a wider perspective across the whole of the UK, that is a valid point to take into account.
	It is generally agreed that a reduction in corporation tax in Scotland would result in some drawing in of business from the rest of the UK; I have heard no serious opinion suggesting anything else. If we accept that, we can do no other than recognise that that is not likely to improve relations between the jurisdictions, and as we would hope that in the event of an independent, or further devolved, Scotland there would be an ongoing relationship, beggar-my-neighbour politics on corporation tax is not helpful. The risk of driving that divide between England and Scotland by achieving a marginal gain in corporation tax revenue in the short term is not worth the candle.

Mike Freer: I am grateful to the hon. Gentleman for giving way and I pay tribute to his chairmanship of the Scottish Affairs Committee. Does he also recall the evidence we got from the editor and the business editor of The Scotsman? The issue was not the cannibalisation of corporation tax but the fact that the business community did not trust the SNP not to drive business out of Scotland with a high tax policy.

Ian Davidson: That is true, but that is a slightly different point. The business community was absolutely clear that it was worried not only about uncertainty but that the SNP might end up having an anti-business or a business-unfriendly regime. For the purposes of this debate, however, I was not going to go down that particular route at the moment. It is fair to say that nobody who was raising arguments in favour of the devolution of corporation tax was suggesting that it should be raised, but there was an assumption that devolution was in order to reduce it. It was noticeable that even with the points that were made in the Committee and subsequently we have not heard an argument about how the initial gap between the moneys that were previously received from the UK Treasury and the reduced amount would be made up. Even if in the longer term corporation tax was going to result in a growth in business taxation, which I doubt, there would undoubtedly be a short-term shortfall, and we have not heard any solution as to how that would be bridged.
	I have great reservations about committing, in the current economic difficulties and a time of recession, to a set of policies that give more money to the private sector and rich people and that cut services for ordinary people who depend on those public services. That is the choice we are being asked to make. If we are all in this together, as has been suggested, how reasonable is it at a time when Scotland has economic difficulties and faces cuts in its budget, to suggest that the budget should be cut further to give a gratuitous tax break to business? That has to be further explored.
	As I said earlier, I do not think this is the end of the matter—it will run and run. That is why the Government have to make available as quickly as possible as much information as they can. I suspect that the Scottish Government produced their figures some time ago and sent them down and that they have either been misfiled in the Scotland Office or lost in the post. I simply find it impossible to believe that after all the huffing and puffing that was done, those figures have not been calculated and sent down here, and I urge the Minister
	to search at the very bottom of his filing tray just in case poor staff work has misfiled those important documents. We have to make sure that this issue is resolved as quickly as possible.
	The point on which the shadow Scottish Secretary was howled down was a very fair one. The interventions from the nationalists managed to distract her from making the important point that in 1988—it is true that was some time ago—Alex Salmond, who was then an SNP MP, was suspended from the House of Commons for attacking the Tory Government’s reduction in corporation tax, calling the proposals an “obscenity”. He might have been right then, but the policies he is adopting now seem slightly different, whereas, if anything, the economic situation is the same. I remember seeing that particular pantomime and, if I remember correctly, Mr Salmond decided to have his intervention because he believed that at a time of economic difficulty cutting taxes for business and for those who had most, for the wealthiest, was an inappropriate use of resources. Exactly the same economic situation pertains now and I think we need an explanation as to why what was an obscenity then is not an obscenity now. I recognise that times move on, cultures change and people develop, so if it was a youthful indiscretion, all well and good. If he tells us that, we may forgive and we may forget, but I very much doubt it. It would be helpful to the debate if that was clarified.
	My second major point is on excise duty. It is interesting that, along with others of the six measures, that one appeared at almost the last moment, like a rabbit from a hat. Some of the measures have been dealt with before, but the excise duty proposal has never been put to the House as something that should be included in the Bill. It looks rather like a development of the girn a day strategy—a grievance a day may break up the Union and if it is not one it will be another.
	I am at variance with some of the thrust of my party’s policy on these measures. Alcohol prices ought to be increased. I am in favour of taking measures that reduce alcohol consumption, and I am willing to look objectively at evidence. If there are fruitful grounds for development, notwithstanding the difficulties, we should look at such measures on a UK basis. I recognise the difficulties in increasing excise taxes and duties in a single jurisdiction—the arguments about cross-border traffic and where the bonded warehouse would be. To be fair, I do not think that the SNP is in favour of customs posts at Berwick, Gretna and elsewhere, and allowing people to bring in only a certain amount of duty-paid English alcohol. I do not think SNP Members are suggesting that, but there is a real danger that their policy, adopted with the best of intentions, would be undermined by the white van trade.
	When cigarettes were smuggled, it was not simply that people brought in cigarettes bought in jurisdictions with low tax regimes; fake cigarettes were smuggled in also. They were not manufactured to the same standards and were actually poisonous, yet they were sold under the counter as reduced-tax cigarettes. People thought they were getting a bonus by buying cheap cigarettes, and the implication was that they were a proper product, but in fact often they were not. The cigarettes were produced in China or elsewhere and although they
	looked like a good deal they were rubbish and people’s health was endangered. There is a real danger that we could be allowing an illicit trade, with smuggled rot-gut Scotch and other liquors marketed under false labels. Differential taxation regimes could take us down that road.
	This debate is likely to continue. There has been grave difficulty in Scotland about priorities and powers. The current squeeze on public expenditure means that, as my right hon. Friend the Member for Birkenhead (Mr Field) said, we need to examine spending in different jurisdictions and the choices that are made. We could considerably enhance politics in Scotland by much more meaningful debate about choices. The differences between political parties have been blurred on a number of issues. We are spending ever-growing sums, but there is very little political debate about the choices to be made. We might debate the order in which additional money is spent, but we never debate who should lose as the result of someone else’s gain.
	The question about different choices was one of the reasons why I signed up to the concept of devolution right from the beginning. If we want to move away from the grievance and dependency culture that so scars Scottish politics, we have to get back, to some extent, to the politics of class, and to the politics of real division—where choices are being made. It seems to me that the Bill and the rejection of all the nationalist amendments is a step towards that conclusion.

David Mowat: I want to make a few points about the excellent speech made by the right hon. Member for Birkenhead (Mr Field) on new clause 8, but before I do so I shall nail a couple of red herrings.
	People have talked about priorities. It is absolutely right that the Scottish Government have the ability to set free prescriptions if that is their priority. It is absolutely right that there can be free tuition and almost free social care. Those priorities should be set in Scotland and it is the Scottish Government’s right to do that. The difficulty arises if they have a different baseline of spending. Nothing I have heard this evening convinces me or my constituents that there is no problem in that regard.
	In the course of their remarks a number of Members said that we need more facts on these matters. Who can argue with that? Everyone is in favour of facts. In my previous career, however, when I heard people call for facts, it was often a delaying mechanism. There have been many reviews of the block grant formula over the past two or three years, most recently a superb piece of work by the House of Lords Select Committee in 2008, whose recommendation was unequivocal; similarly, Holtham. The Calman commission made the point that it was not a proxy for need. Most persuasively, Lord Barnett is clear that the formula was never intended to be used as it has been over the past 30 years. He, I believe, will table an amendment to that effect when the Bill goes forward.
	I am not making the case for Scotland or Northern Ireland having less money or Wales having more. I am making case for the consideration to be based on need, and I will go wherever that takes us. “Based on need” means that we take into account relative population changes. One of the problems with Barnett is that over the past 30 years it has not properly reflected the fact that in both Wales and England population has increased
	more rapidly than in Scotland. Similarly, a needs-based formula would look at indices such as how many old people there are in a community, how many very young and how many disabled, as well as unemployment levels and indices of poverty. It is not rocket science. I do not mind what the answer is, but I will answer the question: what is likely to be the result of a needs-based formula?
	The most coherent piece of work that has been done on this, notwithstanding the book by my hon. Friend the Member for Milton Keynes South (Iain Stewart), was by Professor David Bell of Stirling university. In evidence to the House of Lords Select Committee, his estimate was that the current allocation that Scotland receives is roughly 120% of that which is due in England and it should be closer to 105% or 107%. A difference of that order implies a yearly difference of £4.5 billion or, over the lifetime of this Parliament, a difference of £22 billion. I do not know if that is right, but Professor David Bell did a lot of work on that, as did the Holtham committee and others in respect of the House of Lords Select Committee.
	The question might arise why we need to fix the problem now. There are a number of reasons—not just the fact that the Bill would be a convenient place to do it, although that is true, and not just because of the resentment that is felt in England and Wales. The right hon. Member for Birkenhead used an important word—“sourness”, which debases all of us and it is not the right answer to those of us who are Unionists. If we are not careful, we will be building up a bank of sympathy for devolution or separation in England.
	The Bill for the first time equates Scottish levels of income tax to the level of the grant. I am concerned that unless we make the necessary reform to the block grant, it will become almost impossible to do in future. If the figure of £4.5 billion put forward by Professor Bell of Stirling university were correct, that would imply that Scottish basic rate of income tax would have to rise by about 11p in the pound to make up for that shortfall. But that is not the reason that we need to act; there is a moral reason.
	I meet my constituents, have seminars and talk about the fact that we have lost Building Schools for the Future money in Warrington. We have lost the education maintenance allowance in Warrington and England. We could pay for an awful lot of things with some of the £4.5 billion. Of course, as many have said, there would have to be transitional arrangements, but that is not a reason for not starting. I think that it would be over 10 years or more.
	I am genuinely mystified by the stance of Government Front Benchers on the matter. I have read carefully the replies that Ministers have given when asked about this, and they seem to come back to two basic points. The first, which is often made, is that the formula is expedient. It is true that it is easy to do—my understanding is that the whole thing is done by one guy in the Treasury—but that does not seem a great reason to continue with it. The second is that we are too busy fixing the deficit to make the change and that it must wait. As I said in an intervention, I am prepared to accept that reason, but my understanding is that we are on target to fix the structural deficit by 2015, which is before most of the Bill’s financial provisions will take effect, so I see no reason why we do not start to set up the commission
	that would have to look at a needs-based formula for Wales, England and Scotland. The formula must be fair, transparent and moral.
	One final point I wish to make is that I do not support the amendment in so far as it puts a limit of plus or minus 5% on the amount, which I think is wrong. The point is that it should be needs-based. I would be quite happy if a consequence of the needs-based analysis was that Scotland ended up, as I think it would, with more than 105%. I do not support the amendment for the technical reason I have explained, but its basic thrust is right and it is very important that the House addresses this.

Mark Lazarowicz: I want to make a few points on the question of whether corporation tax should be devolved to the Scottish Parliament, as the SNP proposes. Given the time, I will make my comments as briefly as possible.
	There is a respectable intellectual argument that cutting business taxes has a beneficial effect on some businesses and encouraging growth, but we cannot assume that that will automatically be the case. What is important is the effect that a cut in corporation tax would inevitably have on tax revenues. SNP Members were asked time and again in the debate how they could cut corporation tax while protecting public spending, and time and again they did not answer. If their theories are right, businesses might grow in time, but they cannot claim that there will be immediate growth that will make up for a loss in corporation tax. That is not because there is a lack of entrepreneurial spirit among the Scottish people. We must accept that any taxation policy cannot just be a general theory that applies in any circumstance. We have to look at the actual situation in a particular location and at a particular time.
	The fact is that the biggest beneficiaries of a reduction in corporation tax in Scotland would be the big banks and power companies, not small and medium-sized businesses. Why on earth would cutting bank taxation encourage the banks to invest more in the Scottish economy and promote jobs? There are many other ways to encourage business growth in Scotland, and at the moment the Scottish Government have those powers. The Bill will give them more such powers, which is what should be done, rather than cutting corporation tax for beneficiaries, which we cannot assume will benefit the Scottish economy and Scottish business.
	Another point is that if the Scottish Government were to go ahead with a corporation tax reduction, as they suggest, how can we assume that there would be no response from the UK Government? If the Scottish Government’s policies were to lead to a substantial transfer of businesses from England to Scotland, there would of course be a response at UK level, and at the end of the day that would lead to an overall driving down of the UK Government’s tax base. That in turn would inevitably lead to cuts in public services and public spending, and the SNP has to recognise that if it is to address the issue seriously.
	I am not opposed to looking again at taxation and to considering all options, but I do not want us to go ahead with proposals that could have consequences that we cannot reverse. If the SNP is to pursue that line, it has to give us more information about the consequences
	of its policies. If it does not do so, it will be rightly criticised for coming forward with ideas that are all talk and no reality.
	Debate interrupted  (Programme Order, this day).
	The Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the clause be read a Second time.
	Question agreed to.
	New clause 5 accordingly read a Second time, and added to the Bill.
	The Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).

New Clause 6
	 — 
	Exercise of functions relating to Seirbheis nam Meadhanan Gàidhlig

‘(1) The Broadcasting Act 1990 is amended as follows.
	(2) In section 183 (financing of programmes in Gaelic out of Gaelic Television Fund) for subsection (1) substitute—
	“(1) The Scottish Ministers must, for each financial year, pay to OFCOM such amount as they may determine to be appropriate for the purposes of this section.”
	(3) Omit subsection (8) of that section.
	(4) Section 183A (membership of the Gaelic Media Service) is amended as follows.
	(5) In subsection (4) after “the Secretary of State” insert “and the Scottish Ministers”.
	(6) In subsection (6)(b) after “the Secretary of State” insert “with the agreement of the Scottish Ministers”.
	(7) In Schedule 19 (Gaelic Media Service: supplementary provisions), paragraph 12 (annual reports) is amended as follows.
	(8) In sub-paragraph (3) for the words from “the Secretary of State” to the end substitute—
	(a) the Secretary of State, who must lay copies of it before each House of Parliament, and
	(b) the Scottish Ministers, who must lay a copy of it before the Scottish Parliament.”
	(9) Sub-paragraph (4) is omitted.
	(10) In the Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 1999 (S.I. 1999/1750)—
	(a) in Schedule 1 (functions transferred to the Scottish Ministers), omit the entry relating to section 183 of the Broadcasting Act 1990;
	(b) in Schedule 2 (functions made exercisable concurrently), omit the reference to paragraph 12(3) of Schedule 19 to that Act;
	(c) in Schedule 5 (modification of enactments), omit paragraph 10(4).’.—(Mr Gauke.)
	Brought up, and added to the Bill.

New Clause 12
	 — 
	Exercise of power to make Order disqualifying persons from membership of the Parliament

‘(1) The 1998 Act is amended as follows.
	(2) In section 112 (subordinate legislation: general), after subsection (5) insert—
	“(6) Section 27 of the Interpretation and Legislative Reform (Scotland) Act 2010 (asp 10) (functions exercisable by Scottish statutory instrument) applies to the function of making an Order in Council under section 15(1) or (2).”
	(3) In section 92 (Queen’s Printer for Scotland), after subsection (4) insert—
	“(4A) For the purposes of subsection (4)(c), the function of Her Majesty of making an Order in Council under section 15(1) or (2) (power to specify persons disqualified from membership of the Parliament) is to be regarded as being exercisable within devolved competence.”
	(4) In section 104 (power to make provision consequential on legislation of, or scrutinised by, the Parliament), after subsection (2) insert—
	“(3) For the purposes of subsection (2)(c), the function of Her Majesty of making an Order in Council under section 15(1) or (2) (power to specify persons disqualified from membership of the Parliament) is to be regarded as being exercisable within devolved competence.”
	(5) In Schedule 4 (enactments etc protected from modification), in paragraph 11 (general exceptions: subordinate legislation), after sub-paragraph (3) insert—
	“(4) For the purposes of sub-paragraph (3)(c), the function of Her Majesty of making an Order in Council under section 15(1) or (2) (power to specify persons disqualified from membership of the Parliament) is to be regarded as being exercisable within devolved competence.”’.—(Mr Gauke.)
	Brought up, and added to the Bill.

New Clause 13
	 — 
	The Lord Advocate: Convention rights and Community law

‘(1) The 1998 Act is amended as follows.
	(2) In section 57(3) (Community law and Convention rights: excepted acts of the Lord Advocate), omit the words after paragraph (b).
	(3) After section 98 insert—
	“98A The Lord Advocate and Convention rights etc: criminal appeals
	(1) This section applies to an act or failure to act of the Lord Advocate—
	(a) in prosecuting any offence, or
	(b) in the capacity of head of the system of criminal prosecution in Scotland.
	(2) In this section “compatibility” means the compatibility of such an act or failure to act with any of the Convention rights or with Community law.
	(3) For the purpose of determining any question relating to compatibility, an appeal shall lie to the Supreme Court against a determination by a court of two or more judges of the High Court of Justiciary.
	(4) An appeal under this section lies from such a court only with the permission of that court or, failing such permission, with permission of the Supreme Court.
	(5) Where the High Court’s determination was on an appeal under section 106 of the Criminal Procedure (Scotland) Act 1995 (appeal from solemn proceedings), subsections (3) to (3D) of that section apply in accordance with subsections (7) and (8) below.
	(6) Where the High Court’s determination was on an appeal under subsection (2) of section 175 of that Act (appeal from summary proceedings), subsections (5) to (5D) of that section apply in accordance with subsection (7) and (8) below.
	(7) The subsections of the 1995 Act referred to in subsections (5) and (6) above (appeal to be on grounds of miscarriage of justice) apply to the Supreme Court in relation to an appeal under this section as they apply to the High Court in relation to any appeal.
	(8) But an alleged miscarriage of justice may not be brought under review of the Supreme Court by virtue of subsection (7) except for the purpose of determining a question relating to compatibility.
	(9) In relation to an appeal under this section, the Supreme Court has all the powers of the court below and may (in consequence of determining a question relating to compatibility)—
	(a) affirm, set aside or vary any order or judgment made or given by that court;
	(b) remit any issue for determination by that court;
	(c) order a new trial or hearing.”
	(4) In paragraph 1 of Schedule 6 (devolution issues), after sub-paragraph (f) insert—
	“But a question whether an act or failure to act is, or would be, incompatible with any of the Convention rights or with Community law is not a devolution issue if it is an act or failure to act of the Lord Advocate in prosecuting any offence or in the capacity of head of the systems of criminal prosecution and investigation of deaths in Scotland.”
	(5) The Criminal Procedure (Scotland) Act 1995 is amended as follows.
	(6) In sections 112(6), 121(5)(a), 121A(5), 122(4) and (5) and 177(8), for “paragraph 13(a) of Schedule 6 to the Scotland Act 1998” substitute “section 98A of the Scotland Act 1998 or paragraph 13(a) of Schedule 6 to that Act”.
	(7) In section 124(2)—
	(a) for “and paragraph 13(a) of Schedule 6 to the Scotland Act 1998” substitute “, section 98A of the Scotland Act 1998 and paragraph 13(a) of Schedule 6 to that Act”;
	(b) after “appeal under” insert “section 98A of that Act or”.
	(8) In section 288A—
	(a) in subsection (1) omit “in pursuance of paragraph 6 of Schedule 6 to the Scotland Act 1998 (devolution issues)”;
	(b) for subsection (2) substitute—
	“(2) Where the Advocate General for Scotland was a party in pursuance of paragraph 6 of Schedule 6 to the Scotland Act 1998 (devolution issues), the Advocate General may refer to the High Court for their opinion any devolution issue which has arisen in the proceedings.
	(2A) Whether or not subsection (2) applies, the Advocate General for Scotland may refer to the High Court for their opinion any question which has arisen in the proceedings as to whether an act or failure to act of the Lord Advocate in prosecuting in the proceedings or in the capacity of head of the system of criminal prosecution in Scotland was incompatible with any of the Convention rights or with Community law.
	(2B) If a reference is made under subsection (2) or (2A) the Clerk of Justiciary shall send to the person acquitted or convicted and to any solicitor who acted for that person at the trial a copy of the reference and intimation of the date fixed by the Court for a hearing.”;
	(c) in subsection (6) after “(2)” insert “or (2A)”.
	(9) In section 288B(1)—
	(a) for “paragraph 13(a) of Schedule 6 to the Scotland Act 1998” substitute “section 98A of the Scotland Act 1998 or paragraph 13(a) of Schedule 6 to that Act”;
	(b) omit “of a devolution issue”.’.—(Mr Gauke.)
	Brought up, and added to the Bill.

New Clause 14
	 — 
	Power to vary retrospective decisions about non-legislative acts

‘In section 102 of the 1998 Act (powers of courts or tribunals to vary retrospective decisions), in subsection (1) at the end add “, or
	(c) any other purported exercise of a function by a member of the Scottish Government was outside devolved competence.”’.—(Mr Gauke.)
	Brought up, and added to the Bill.

New Clause 9
	 — 
	Tax on profits of companies

‘In Part 4A of the 1998 Act (as inserted by section 24), after Chapter 4 (inserted by section 30) insert—

“Chapter 5
	 — 
	Tax on Profits of Companies

80L Tax on profits of companies
	The Secretary of State shall, within one month of the coming into force of section 80B of this Act, lay in accordance with Type A procedure as set out in Schedule 7 to this Act a draft Order in Council which specifies as an additional devolved tax a tax charged on the profits of companies.”’.—(Stewart Hosie.)
	Brought up.
	Question put, That the clause be added to the Bill.
	The House divided:
	Ayes 9, Noes 382.

Question accordingly negatived.

Clause 1
	 — 
	Administration of elections

Amendment made: 13,page2,line43, at end insert—
	“(5) Before making regulations under this section the Secretary of State must consult the Scottish Ministers.”’.—(David Mundell.)

Clause 2
	 — 
	Combination of polls at Scottish Parliamentary and other reserved elections

Amendment made: 14,page3,line12, at end insert—
	‘( ) After subsection (3) insert—
	(3A) But subsection (2) does not confer power on a returning officer to determine that a Scottish Parliamentary election and a local government election in Scotland are to be taken together.”
	( ) After subsection (5A) insert—
	“(5B) Before making provision under subsection (5) in connection with the combination of polls where one of the elections is a Scottish Parliamentary election or a local government election in Scotland, the Secretary of State must consult the Scottish Ministers.”’.—(David Mundell.)

Clause 3
	 — 
	Supplementary and transitional provision about elections

Amendment made: 30,page3,line32, leave out ‘instrument containing the’.—(David Mundell.)

Clause 27
	 — 
	Income tax for Scottish taxpayers

Amendment made: 31,page22,line9, at end insert—
	‘( ) In section 989 (definitions), in the definitions of “additional rate”, “basic rate” and “higher rate”, after “section 6(2)” insert “or (2B)”.’.—(David Mundell.)

Clause 32
	 — 
	Borrowing by the Scottish Ministers

Amendments made: 15,page25,line8, after ‘taxes’, insert ‘, or from income tax charged by virtue of a Scottish rate resolution,’.
	Amendment 32,page25,line16 at end insert—
	‘( ) After subsection (4) insert—
	(5) The Secretary of State may by order made with the consent of the Treasury amend subsection (1A) so as to vary the means by which the Scottish Ministers may borrow money.”’.
	Amendment 33,page25,line42, at end insert—
	‘( ) In section 114(1) (powers which may be exercised by modifying the 1998 Act), after “sections” insert “66(5),”’.
	Amendment 34,page26,line1, leave out ‘place’ and insert ‘places’.
	Amendment 35,page26,line1, at end insert—
	
		
			 ‘“Section 66(5) Type E”; and’.

Clause 37
	 — 
	Transitional provision for Scottish statutory instruments

Amendment made: 36,in page28,line5, leave out Clause 37.—(David Mundell.)
	Third  Reading
	Queen’s consent signified.

Michael Moore: I beg to move, That the Bill be now read the Third time.
	I am very grateful to Members who have taken part in all the different debates on the Bill, in particular those from the Opposition parties, members of the Scottish Affairs Committee and the many others who have examined the Bill closely during its passage through the House. Today, we have had important additional contributions by the hon. Member for Dundee East (Stewart Hosie), my hon. Friend the Member for Milton Keynes South (Iain Stewart) and the right hon. Member for Birkenhead (Mr Field), among others.
	The Bill delivers the key coalition commitment, set out in our programme for government, to implement the proposals of what we know as the Calman commission. The commission, established in the last Scottish Parliament, had the support of a wide cross-section of society in Scotland. Its membership included representatives of the three main United Kingdom political parties, local government, experts in Scots law, business, education and the trade unions.
	Under the chairmanship of Sir Kenneth Calman, the commission gathered evidence from a wide range of sources and engaged directly with people in Scotland through detailed consultations, public engagement events, oral evidence and survey evidence. The commission reported to both the Scottish Parliament and the previous UK Government. At the general election in 2010, all three main UK-wide parties had manifesto commitments to take forward the recommendations made by the commission. Those commitments are being delivered in the Bill.
	As Members are aware, the Bill will introduce a new Scottish rate of income tax, and it will fully devolve responsibility for stamp duty land tax and landfill tax to the Scottish Parliament. It will provide for new tax-raising powers to be created at the request of the Scottish Parliament, and it will introduce a new capital borrowing power and extend the current borrowing powers of Scottish Ministers. When combined with the existing tax-raising powers of the Scottish Parliament, it will provide Scottish Ministers with a total of £12 billion- worth of financial powers. That is a hugely significant
	package, which represents the largest ever transfer of financial powers from Westminster to Scotland. It is a radical but responsible step.
	The Bill is not about transferring power for power’s sake; it is about creating accountability. By taking on the responsibility for raising the taxes required to fund the spending decisions that they take, the Scottish Parliament and Scottish Ministers will be more accountable and better equipped to respond to Scotland’s needs within the UK.
	The Bill has been the subject of detailed scrutiny on the Floor of the House and by the Scottish Affairs Committee. The debate has been animated, even lively at times, such is the strong feeling and the keen interest in it that is felt throughout the House. However, our proposals have not just been scrutinised at Westminster. After the introduction of the Bill, the Scottish Parliament established a Scotland Bill Committee to assess the measure and the supporting package set out in the Command Paper, “Strengthening Scotland’s Future”. The Scotland Bill Committee issued a detailed 240-page report on the measure. The Committee’s first and main conclusion was that the Scottish Parliament should support the Scotland Bill. In the subsequent plenary vote, the Scottish Parliament voted overwhelmingly in favour of a legislative consent motion, agreeing to the Bill by a margin of 121 to three, with support from the Scottish Government. I am grateful to all parties for their support.
	Since then, there have been elections to the Scottish Parliament, and I congratulate the Scottish National party on its victory. A new Scotland Bill Committee—meeting for the first time today—will examine the measure in the Scottish Parliament. I welcome that further scrutiny. However, given the previous Scottish Government’s support for the Bill, I look forward to that support continuing. In fact, I expect that it will have been strengthened by the package of amendments that the Chancellor and I announced on 13 June.
	The amendments were based on the valuable report of the Scottish Affairs Committee, and also on the report from the Scotland Bill Committee that the Scottish Parliament endorsed so strongly. The amendments that we tabled on Report were based on the evidence that we received from the two Committees. The amendments to the package will ensure that Scottish Ministers have greater flexibility to exercise their new powers effectively.
	We continue to believe that the package set out in the Bill and the Command Paper, based on cross-party consensus, meets the objective of strengthening Scottish devolution within the United Kingdom.

Menzies Campbell: May we take it that, as a result of the earlier proceedings, Government new clause 13 is now part of the Bill? If so, is that a confirmation of the fact that in any matter involving human rights, the Supreme Court is the final arbiter, notwithstanding some of the childish and petulant outbursts that we have heard north of the border in recent weeks?

Michael Moore: First, I confirm what my right hon. and learned Friend suggests. New clause 13 is now part of the Bill that will go to the House of Lords for scrutiny. Like him, I regret the tone of some of the remarks made against judges in the Supreme Court in
	recent weeks. I welcome the broad support for the idea that people in all parts of the United Kingdom should enjoy the same rights under the courts.

William Cash: On the application of the Human Rights Act 1998 in this context, and conceding that the Supreme Court has a special role to play, does the Secretary of State accept that some Government Members, and an increasing number of people throughout the country, feel that the Human Rights Act should be repealed, and furthermore that the whole basis on which it operates and the European convention on human rights should be reviewed?

Michael Moore: I welcome the hon. Gentleman to the proceedings on the Scotland Bill, albeit belatedly, and commend him for his ever sharp eye, looking for opportunities to raise matters European in the Chamber. Perhaps with some disappointment, we will have to agree to disagree on the fundamentals, but I point out that we are indeed considering human rights legislation in this country. I am sure that we will have a proper debate about that over many days and weeks.
	Let me outline the key changes that we introduced on Report. First, we will bring forward to this financial year access to finance to allow work on projects, such as the Forth replacement crossing, to begin. We are removing the requirement for Scottish Ministers to absorb the first £125 million of tax forecasting variation within their budget. That will give Scottish Ministers more flexibility to decide how best to respond to any variations in tax receipts compared with forecasts. We will also allow Scottish Ministers to make discretionary payments into the Scottish cash reserve for the next five years, up to an overall total of £125 million. That will help manage any variation in Scottish income tax receipts, compared with forecasts in the initial phase of the new system.
	As debated on Report, we have included a provision in the Bill to enable the Government to amend the way in which Scottish Ministers can borrow to include bond issuance. Without that power, further primary legislation would have been necessary to allow bonds to be issued by Scottish Ministers. Before that power is transferred, the Government will conduct a review of the costs and benefits of bond issuance over other forms of borrowing.
	We have also strengthened the non-financial sections of the package to enable Scottish Ministers to approve the appointments of MG Alba board members, and to provide for reciprocal consultation between UK and Scottish Ministers when either make changes to electoral administration that impact on their respective responsibilities. We are devolving the power to make an order to disqualify persons from membership of the Scottish Parliament, and we intend to strengthen intergovernmental dialogue in areas of mutual interest in welfare.
	Importantly, as my right hon. and learned Friend the Member for North East Fife (Sir Menzies Campbell) indicated, we are implementing the findings of the expert group appointed by the Advocate-General. There is a consensus that there is a problem with the role of the Lord Advocate under existing legislation. The Scotland Act 1998 did not properly recognise that the Lord Advocate fulfils two separate roles: one as chief prosecutor
	in Scotland, and the second as a Scottish Minister. Our amendment separates those two roles while retaining the consistent application of the protection of fundamental rights for those in Scotland, as exists for those in the rest of the United Kingdom. We believe that it strikes the correct balance.
	We believe that the package of the Bill as amended and the supporting non-legislative measures provides the right balance of powers and responsibility for Scotland within the United Kingdom. Today’s debate marks the end of the first stage of debate on, and scrutiny of, the Bill in the House of Commons, but it is by no means the end of the process. There will be further opportunities to consider, debate and amend the Bill in their lordships’ House.
	However, as hon. Members will be aware, the Scottish Government have asked for further amendments to the Bill. We have made it clear that we will listen and that we are willing to consider further amendments if they satisfy some key tests. First, any further amendments must be based on detailed proposals. We must be convinced, by evidence and detailed analysis, to support any amendments to a package that we believe provides Scotland with the right balance of responsibility and accountability. Secondly, any further amendments must demonstrate that they will deliver clear benefits to Scotland, without prejudice to the rest of the United Kingdom. Thirdly, any further amendments must generate cross-party consensus, which the measures set out in the Bill have achieved.

Russell Brown: The Liberal Democrats, the Conservatives and the Labour party want this legislation, but the Secretary of State is talking about further amendments. Does he recognise that members of the public wonder why we are going ahead with the Bill, when what lies in front of us at some given point is a referendum on independence? The point has been made to me, by an admittedly small number of my constituents, that we should have parked the Bill, waited for a referendum, and resurrected it thereafter if necessary. Does he recognise that some outside this place will have concerns about further amendments?

Michael Moore: I have just set out the criteria against which we would assess any suggested further amendments. There is scope within the passage of the Bill to consider those points further.
	On the hon. Gentleman’s fundamental point, my argument right from the start, which I believe has had a degree of cross-party consensus, is that it is important that we empower Scottish Ministers and the Scottish Parliament with these new arrangements to enable them to get on with their jobs. The measures enhance Ministers’ economic powers and the accountability of the Scottish Parliament. I do not believe that delaying those measures is in anybody’s interest. We do not know what the terms of any referendum will be or what type of independence will be offered.

Mark Lazarowicz: Mine is a narrower point. Will the right hon. Gentleman give an assurance that, if amendments come forward from the Scottish Government that the UK Government accept and which go through the Lords, we will have proper time to discuss them in this House? We do not want three or four amendments
	coming here for one hour’s discussion during ping-pong. Can we get a guarantee of time to discuss any amendments that come forward?
	[Interruption.]

Michael Moore: My distinguished colleagues the Leader of the House and the Deputy Leader of House were just indicating—I was going to say “muttering”, but it would be inappropriate to suggest such a thing—in their typically generous fashion that adequate time would be made available should such amendments come forward. I look forward to holding them to that should it be necessary.
	The Bill has been subject to detailed scrutiny in this Parliament and the Scottish Parliament. That scrutiny will, of course, continue, but I am confident that the process in the House has reinforced the central purpose of the Bill: to strengthen the Scottish Parliament so that it serves the Scottish people better. I commend it to the House.

Ann McKechin: As we made clear on Second Reading and in Committee, Labour welcomes the Scotland Bill because we believe that it will enhance the devolution settlement. As the Secretary of State mentioned, the Bill was the consequence of a lengthy, evidence-based, serious consultative process that sought cross-party consensus from the very beginning. It reflects many of the recommendations made by the Calman commission, which was established by the then Labour Government following the direct call from the Scottish Parliament for such a group to be set up. Important issues of constitutional change should not be marked by megaphone diplomacy and a never-ending series of demands. Constitutional change must always be based on hard evidence, consensus and consultation, and it should be clearly shown how it will improve the devolution settlement. It is not, for us, a marker on the route to separation.
	Labour’s position is that it is not in Scotland’s best interests for the Scottish Government to play constitutional games and demand powers. It is time to start using those they already have, and to knuckle down to the hard task of getting the Scottish economy back on track, lowering record unemployment and generally making Scotland better. Although it is all too easy in the political game to focus on process rather than on policy, the important parts of the Bill are, first, to improve legitimacy and accountability to the Scottish electorate, and, secondly, to use these powers, along with the extensive range of powers granted in the Scotland Act 1998, for Scotland’s benefit.
	I would like to spend a little time discussing the Supreme Court new clauses, which unfortunately we did not have time to discuss this evening, and which were not available in Committee. We welcome the fact that the Government did, as we requested, table the new clauses before the Commons stages were completed, and obviously we will want to discuss them in more detail when they reach the House of Lords, but I would like to put on the record what principles should be followed in referring cases to the Supreme Court. Labour fully agrees that the UK Supreme Court should retain a role in determining human rights and European law issues. The UK Supreme Court enables Scots to access
	justice without the expense and delay of having to go to Strasbourg, and without having to wait for years to have their cases heard. We believe that no one living in Scotland should have less access to the enforcement of their human rights than any other citizen living elsewhere in the UK.
	Why would the Scottish Government want to make it more difficult for individuals in Scotland to access justice? Let us recall that it was a famous Scottish case to the Strasbourg Court in the 1980s that brought about the abolition of the belt in schools across the UK when the Court found in favour of two Scottish mothers, Grace Campbell and Jane Cosans. In those days, before the Human Rights Act 1998, cases took years to be heard, and in the meantime tens of thousands of children in Scotland and across the UK were belted right around the place in schools. The Human Rights Act is not about protecting bad people or about an easy escape route from jail; it is about protecting everyone from prejudice and harm.

Pete Wishart: I am grateful to the hon. Lady for her history lesson, but she will know, as the Secretary of State does, that the amendments concerning the Supreme Court are totally unacceptable to the Scottish Government, and will be unacceptable to the Scottish Parliament too. May I suggest to her and the Secretary of State that the expert group under Lord McCluskey should be allowed to do its work before anything further is done regarding the Supreme Court in this House?

Ann McKechin: What I would say to the hon. Gentleman is that we are aware that the McCluskey review is ongoing, and we will wish to consider its conclusions carefully when it reports. We will return to further analysis of the report in the Lords, which I hope will be available by the time this Bill reaches the other place.
	We cannot continue this evening without mentioning the extraordinary attack that the First Minister and his Secretary for Justice made on both the Supreme Court and individual Scottish judges who sit in it, when they stated that the UK courts should have no jurisdiction in Scottish criminal cases. Let us be clear: no one is attacking the right for Scotland to retain its unique criminal legal system—I declare an interest, as a non-practising member of the Law Society of Scotland. However, on the other hand, those attacks smack of a political establishment that is too ready to attack anyone who dares to contradict its mantra, rather than one that is prepared robustly to tackle institutional complacency. It is entirely demeaning to Scotland’s international reputation when Scotland’s leading politician uses the language of the playground bully when describing the key relationship between the Executive and the judiciary. Mr MacAskill has referred to the UK Supreme Court as an “ambulance-chasing court”, despite it hearing on average only one Scottish case a year since devolution, and he has ignored the fact—or perhaps he was totally ignorant of it—that his own Scottish Crown Office is making referrals to the very same court.

Anne McGuire: Does my hon. Friend agree that the furore about the Supreme Court over the past few weeks smacks of opportunism, when what she describes has been the situation since the Scotland Act 1998 was passed by this House more than 12 years ago?

Ann McKechin: My right hon. Friend is right to say that this row has emerged from absolutely nowhere, and has arisen simply for the sake of political expediency.
	Mr MacAskill—that well-known expert on making sound judgements—also claimed that Supreme Court judges picked up their knowledge of Scots law during visits to the Edinburgh festival, and threatened to withdraw funding. He can now add to his list of achievements that he is the first Minister in any part of the UK who has threatened to close a court by stopping its cheques. Perhaps after such a long-maintained silence over the last two years, the pressure on him was too much to bear.

Menzies Campbell: Of the two cases that have proved so controversial, the first dealt with the protection of a person once charged and taken into custody by the police. The second dealt with whether there is a continuing obligation on the prosecution to make available all evidence to the defence, including evidence that might have the effect of exculpating someone who has been accused. Are those two principles not right at the very heart of the Scottish legal system, to which the hon. Lady has just referred?

Ann McKechin: The right hon. and learned Gentleman speaks with considerable expertise on legal issues. I do not want to discuss the individual cases, but he is absolutely right that they involved important points of principle that everyone who is concerned about the integrity of Scottish law should take seriously into account.
	Mr Salmond has attempted to climb down from the remarks that he made in a Holyrood Magazine interview, but has refused to apologise. “Better late than never” should be the new mantra, but the First Minister does not have a reverse gear. Instead, this whole sorry incident has typified a controlling approach that his spin doctors have tried hard to hide. In his view, there is a hierarchy in our national debate between those who are deemed “good Scots” and those classified as “bad Scots”, and anyone who speaks directly against his view will always be in the latter category, even if they are one of our country’s most eminent legal minds.

Eleanor Laing: I would never claim to be one of our country’s eminent legal minds, but, like the hon. Lady, I am a non-practising member of the Law Society of Scotland. I commend her for her defence of Scots law against the current actions of the Scottish Parliament.

Ann McKechin: I am grateful to the hon. Lady, a fellow lawyer. I do not want to turn this into a lawyers’ conference, however, lest anyone should suspect that we have vested interests. More seriously, this is about the tone of the debate and about the relationship between the Executive and the judiciary, which forms the foundation of our democracy.
	I noted in this week’s Sunday Herald that some of the First Minister’s own Ministers and MSPs apparently refer to him in private as the “Dear Leader”. References to any similarity with North Korea might seem comical, but this display fits in better with a paranoid one-party state than with a modern, progressive, advanced 21st-century democracy. I certainly do not believe that everyone who
	supports the SNP or wishes for independence follows that creed—Jim Sillars is a good example of someone who believes in independence but also believes in listening to other people’s arguments—but it certainly has a home within the SNP “cybernat” sphere.

William Cash: Does the hon. Lady acknowledge that the real problem is that this dispute is not so much about the Supreme Court as about the application of the Human Rights Act 1998 to the Supreme Court? For practical purposes, the Scots are entitled to their criminal law, and that has been the case since the inception of the Union.

Ann McKechin: The hon. Gentleman has very particular views about European human rights legislation, but I support it 100%. I believe that the Human Rights Act enhances our legal system, and it is important that people in Scotland should receive the same level of protection as everyone else. The Act is a UK-wide piece of legislation, and it is important that judgments should be made consistently. Accordingly, it is right that there should be one ultimate Court of Appeal that makes important decisions on key points of principle. The Cadder decision, which the right hon. and learned Member for North East Fife (Sir Menzies Campbell) mentioned, was one such decision. It is important to have consistency of judgment, which is one of the parts of our judicial process.
	Like most people in Scotland, my domicile arises from birth and not from choice, but I believe that I am exceptionally fortunate to have been born in Scotland at this time in history and I am proud to be a Scot. However, I totally renounce any attempt to mould the politics and culture of the country that I love into one that is marked by a constant placing of the “good Scot versus bad Scot” concept into the dialogue of our public life. That is both dangerous and destructive, and represents a threat to genuine debate. The tactics of the playground bully should form no part of a modern, open Scotland.
	Scotland’s legal systems, like any other area of our public life, need to be open to ideas from the outside, and not just from its own legislature. In fact, many of our oldest precepts and concepts are borrowed from a wide combination of other European systems—French, Dutch and Roman as well as English. We have also learned from cases that have occurred in England. It was because we are part of the United Kingdom that one of the most famous cases of tort and delict in civil law, Donoghue v. Stevenson, which took place in my own home town of Paisley, spread across the world. When we genuinely look outwards, we perform at our best; when we revert to inward, defensive complacency, we let our nation down.
	This has been an important debate on the future that we see for Scotland. As the Secretary of State has said, the debate will continue over the weeks and months to come, but I want to ensure that it takes place in the context of the hard, reasoned evidence that the Scots demand of us, and that it can be clearly shown to be for their benefit.

Alan Reid: The Bill brings about a substantial increase in the powers that are devolved to the Scottish Parliament, especially those relating to taxation and borrowing. As
	such, it represents a substantial event in the process of devolution. I congratulate Professor Calman and his commission on bringing forward the proposals after detailed consultation, and on achieving consensus among three political parties. His proposals were subject to detailed scrutiny in the Scottish Parliament Bill Committee and by the Scottish Affairs Committee here. I also congratulate the Secretary of State and the Under-Secretary on their hard work in putting the Bill together and taking it through the House.
	It is an old saying that devolution is a process, not an event. This is an important process; there will no doubt be further processes to come, but it is important that the subsequent devolution processes follow the same process as the Calman Commission and the Bill. There must be widespread consultation, detailed evidence should be produced and examined and then the Bill should be taken through after detailed scrutiny. The amendments rejected earlier this evening did not have the detailed evidence behind them.

Ian Davidson: I want to pick up on the issue of process. Amendments have been defeated tonight, but they will probably reappear in the Scottish Parliament. Does the hon. Gentleman agree that before they are debated further in this House, the Scottish Affairs Committee and others must examine them forensically to make sure that the gaps in the evidence that were identified earlier this evening can be exposed so that we can have a proper discussion and debate about the choices to be made?

Alan Reid: I certainly agree with the Chairman of the Scottish Affairs Committee and hope that his Select Committee will subject these proposals to detailed scrutiny.
	Two of Scotland’s political parties took part in the original constitutional convention, which went up to three in the Calman commission. The party that has not taken part in any of these processes is the Scottish National party. I accept that it has a mandate for a referendum on independence and I look forward to that campaign. Where I think the SNP goes wrong is that it makes no attempt to bring about consensus within Scotland. Its referendum will fail and I suggest that in future it works with other parties so that detailed proposals can be subjected to scrutiny and we can take the process of devolution further forward. This Bill represents an important step. I hope that the House of Lords will pass it speedily so that all the important extra powers given to the Scottish Parliament can be put into effect.

Pete Wishart: We said on Second Reading that we would seek to strengthen and improve the Bill, offer real scrutiny and support any measures that brought significant and substantial new powers to Scotland. We are pleased that, in a number of areas, this is a better Bill today than the one presented on Second Reading.
	I would also like to pay tribute to many Members who participated in the debates, particularly to those who participated in the Calman commission, and to thank people for all the hard work that was done in the Scottish Parliament Bill Committee. Although we did
	not necessarily agree with everything that was said, I appreciated the conscientious and diligent approach to the work.
	Is this the Bill that Scotland urgently requires? I have to say that, unfortunately, the answer is no. Although we have managed to secure some more job-creating powers, this Bill falls way short of the ambitions of the Scottish people as directly expressed only a few short weeks ago, and it still lacks the measures that could have helped to develop our economy and make it grow.
	Some of the new provisions are, of course, welcome. We welcome the acceptance of the amendments on borrowing as well as the devolution measures on airguns, speed limits and drink-driving, which will make Scotland a safer place. However, the Unionist parties seem almost incapable of preventing themselves from making re-reservations, which are a million miles away from where the Scottish people are in questions about their constitutional future.

Russell Brown: I thank the hon. Gentleman for giving way; he obviously has some time left. I hope that in the next few minutes he will explain what Bill the people of Scotland are looking for.

Pete Wishart: I think that we had something a few weeks ago that was called an election, and manifestos were presented for it. One manifesto had plans for including job-creating powers in the Scotland Bill and the other manifesto was produced by the Calman commission parties. I think that the Scottish people made clear which direction of travel they support.

Russell Brown: Will the hon. Gentleman give way?

Pete Wishart: I will not give way to the hon. Gentleman again.
	We know what the Scottish people want when it comes to such matters. I was disappointed to hear what was almost a rant from the hon. Member for Glasgow North (Ann McKechin). Members’ personal attacks on the First Minister suggest that they have learnt absolutely nothing. Negativity does not win elections, but we hear continued, incessant negativity.

Robert Smith: Will the hon. Gentleman give way?

Pete Wishart: I do not have time to give way.
	I can only ask Members to continue down that route so that we can continue to secure victories such as the one we secured only a few short weeks ago.

Robert Smith: rose—

Pete Wishart: I have only 10 minutes left.
	The Bill contains unpalatable measures that are totally unacceptable to the Scottish Government, and which were aired a moment ago, concerning the Supreme Court.

Robert Smith: rose—

Pete Wishart: I will give way, for the very last time.

Robert Smith: The hon. Gentleman spoke of a personal attack on his leader from the Opposition Front Bench. Does he not think that the head of a Government in a proper, modern, functioning democracy should show respect for the courts, which protect the individual citizen from abuse of power by the state?

Pete Wishart: I am almost grateful to the hon. Gentleman, because he has referred to a measure I want to deal with. The measure relating to the Supreme Court that was passed today is totally unacceptable to the Scottish Government, and will be unacceptable to the Scottish Parliament as well. When the last Scottish Parliament Bill Committee considered the Government’s proposals, even that Unionist-led Committee did not see fit to pass them. I do not think that a new Scottish Parliament Bill Committee will be any better disposed towards them.
	Had I been given an opportunity to debate the issue, I would have suggested a sunset clause, so that nothing could be done until the expert group in the Scottish Parliament finishes its work under Lord McCluskey. That is the time for us to discuss how to resolve what is a real issue.

Menzies Campbell: rose—

Pete Wishart: I have said that I will not give way again, and I will not, even to the right hon. and learned Gentleman. Others wish to speak.
	There are real difficulties, but the solution offered by the Secretary of State will not be acceptable to the Scottish Parliament. The most critical aspect of the Bill, however, involves not the unpalatable measures that we have discussed today, but the measures that the Bill omits: measures for which the Scottish people voted when the Bill was last considered by the Scottish Parliament. What they want are job-creating powers and control over the Crown Estates so that we can further the renewables revolution in Scotland.
	Given our mandate, the Scottish National party will revisit those issues in the future. On balance, however, we accept that the Bill contains substantial new powers, and we will not oppose its Third Reading.
	I suppose that we can look at the Bill in two stages—pre and post its testing by the Scottish people. The Calman parties stood on their record and presented it as a major constitutional issue when they fought the election, while the Scottish National party stood on a programme involving the creation of new jobs and powers for the Scottish Parliament. The Scottish people gave the Scottish National party an overwhelming mandate to pursue that agenda, and we will continue to present the case for real job-creating powers. We will not be satisfied until we have those powers in the Scottish Parliament.
	The Bill will now go to the House of Lords before it is returned to the Scottish Parliament for a further legislative consent motion. I say to the Secretary of State and the Government—

Jim Sheridan: Will the hon. Gentleman give way?

Pete Wishart: I will not give way again. I say to the Secretary of State—

Jim Sheridan: rose—

Pete Wishart: I am not going to give way to the hon. Gentleman. Must I say that a third time?
	I say to the Secretary of State that he should not use the fact that there are no Scottish National party members in the House of Lords to introduce any further unpalatable measures, because that would be totally unacceptable. It is democratically elected Members who should decide the fate of our nation, not unelected appointees, donors and cronies.

Jim Sheridan: rose—

Pete Wishart: I am not going to give way to the hon. Gentleman. As he is standing right next to me, I do not know why he cannot hear me.

Mr Speaker: Order. The hon. Member for Paisley and Renfrewshire North (Jim Sheridan) must resume his seat.

Pete Wishart: Thank you, Mr Speaker. It takes a long time for Members to understand that I am not going to give way.
	Once the Bill has completed its passage in the House of Lords it will return to the Scottish Parliament, and a further legislative consent motion will be required because of the many amendments passed by the House of Commons. I know that colleagues in all parties in the Scottish Parliament will want to look closely at a number of those amendments, and I know that the Secretary of State and the House will respect the views of the Scottish Parliament. I know they will accept that the Scottish Government have a massive mandate.
	Many Members have talked about this being part of the devolution story, and it is. This is the second major Bill on devolution to have come before the House. The devolution story will continue to unfold, and we will continue to go down that road, but a new story is now also starting to emerge. It is about a new journey that Scotland is about to embark upon, because at some point over the next few years we will have a proper referendum on the future of Scotland—a proper, constitutional referendum that will be about independence, and I am absolutely sure that the Scottish people will make the right choice and that Scotland will once again join the nations of the world.

Several hon. Members: rose —

Mr Speaker: Order. In calling Mr Iain Stewart, I ask him to consider the merits of allowing a couple of minutes for the Chairman of the Select Committee, but it is up to him.

Iain Stewart: Thank you, Mr Speaker, I shall make a very brief contribution. I just want to congratulate the Government on introducing this Bill, as its provisions are a sensible evolution of the devolution settlement.
	From an English perspective, I think the Bill will go some way towards allaying the concerns felt by many of my constituents about a perception of unfairness in the spending arrangements. I agree that the Scottish Parliament should be responsible for raising a significant chunk of the revenue it wants to spend on services, and this
	presents a sensible way forward. It will not be the end of the matter, however. There will be further debates on the arrangements between Scotland, England and the rest of the United Kingdom.
	I am an unashamed Unionist. I believe that the strength of the United Kingdom is greater than that of the sum of its parts, and I want it to continue always. Others on both sides of the border disagree with that, but I make this plea: whatever further changes are suggested, let them be based on evidence, be sensible, be practical and not be part of some silly constitutional game-playing. The economy of Scotland, and indeed of the whole United Kingdom, is still fragile, and the last thing we need is years and years of constitutional uncertainty. As we send this Bill to the Lords for further consideration, I congratulate the Government again and make that plea for a sensible, evidence-based, common-sense solution.

Ian Davidson: It is very difficult to summarise several months of work in three minutes. I commend the Scottish Affairs Committee report to the House, and I hope everyone will read it carefully.
	A number of points are worth repeating at the conclusion of our debate. Although I recognise that this is not the end of the story and that discussion will continue, the question of transparency in the figures is vital; that cannot be over-emphasised. If amendments from the Scottish Parliament are to be debated, they must be scrutinised as the proposals from Professor Hughes Hallett and Professor Scott were scrutinised—and, of course, in the end those proposals fell by the wayside because they were found to be wanting.
	We must also recognise that financial pressures on the Scottish Parliament are likely to result in pressures for decisions in areas that did not previously have to be addressed. Hard choices are going to have to be made, so it is therefore again essential that the necessary information and arguments are put forward.
	We must also be clear about what the verdict of the Scottish people was. Some 50% of the people in Scotland did not vote in the election. [Interruption.] Of those who did vote, fewer than half voted for separation. [Interruption.] We must remember that more people
	voted for my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) to be Prime Minister than voted for Alex Salmond to be First Minister.
	Not everything the Scottish National party proposes is accepted, therefore. We must remember that Alex Salmond called clearly for a yes vote in the alternative vote referendum and was roundly defeated. [Interruption.] I notice that efforts are being made to shout me down. That is what has traditionally happened in Scotland when people have challenged the nationalists, and those of us who want to challenge the narrow neo-fascism of the nationalists have got to be prepared to have discussions—

Stewart Hosie: On a point of order, Mr Speaker.

Mr Speaker: I hope it is a point of order.

Stewart Hosie: The use of this neo-fascist description is absurd, offensive and wrong in every single regard. What powers, Sir, do you have to ensure that this nonsense is not said or repeated?

Mr Speaker: My powers do not extend to the refutation of nonsense.

Ian Davidson: Is it not neo-fascist to attempt to shout down speakers with whom one disagrees? We have had robust debate in the House on several occasions, but it has frequently been the case in my constituency, after I won it from the nationalists, that they have attempted to shout me down.
	Debate interrupted (Programme Order, this day)
	The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the Bill be now read the Third time.
	Question agreed to.
	Bill read the Third time and passed.

Mr Speaker: We are about to come to the Adjournment and I appeal to right hon. and hon. Members who are leaving the Chamber to do so quickly and quietly to afford a fair hearing to Mr David Amess.

VOLUNTEERING

Motion made, and Question proposed, That this House do now adjourn.—(Stephen Crabb.)

David Amess: It is an absolute delight to have the opportunity tonight to celebrate in the House the work of the hundreds, thousands and millions of volunteers who work throughout the country and whose work we simply could not function without. Volunteers add a commitment and level of care that money could never buy. Everyone should be encouraged to volunteer and people should not be put off by form-filling. I therefore say to my hon. Friend the Minister that I hope the Government will continue to do whatever they can to reduce the red tape around volunteering.
	Having spoken to many charities, I know that they say that Criminal Records Bureau checks help them to protect vulnerable people from individuals who might be at risk, so I no longer think that that is the problem it originally was. However, it is clear that the Government should be encouraged to incentivise volunteering and encourage businesses to recognise the full benefits of volunteering. If businesses helped to promote volunteering and allowed their staff the time to train and undertake volunteering, there would no doubt be a significant rise in the number of volunteers. I know that my hon. Friend and other Members present would be the first to say that when we visit volunteering organisations, they tend to say that they are getting older and to ask where the new volunteers will come from, and that is what I hope we can achieve from this debate.
	I make no criticism whatever of the honours system. I would simply say that all Members of Parliament are continually written to by constituents suggesting that fellow constituents should get an honour, but that is very difficult to achieve. I think of my friend Bruce Forsyth and the fact that it has taken him many years to get a knighthood. I want to mention some of my constituents whom I think should receive honours, such as Ivan Heath, a 95-year-old widower, who is going to leave all his money to charities and is doing so already, and Donald Neil Fraser, a member of Leigh town council, who is over 80 and works as a volunteer morning, noon and night. Con Donovan, the owner of a successful business—a Choice Discount store—does an enormous amount of volunteering, along with his family, and Mark Foster, the famous Olympic swimmer, who comes from Southend, is currently doing an awful lot of volunteering. Joan Alfreda Matthews, a remarkable woman in her 90s, who is the founding member of the Saint Francis hospice, has worked tirelessly as a volunteer for the hospice since 1978 and helps families to come to terms with limiting illnesses. The list is endless.
	Some of us who have been here for a while recognise the frustration of getting honours for individuals. We used to have the opportunity to nominate local heroes through the Experience Corps. I telephoned that organisation to ask why we did not have the opportunity to do so this year. Unfortunately, this is the first year in which we will not have that opportunity because the Experience Corps is not doing it any more, so tonight I am announcing that if no one else is prepared to take on this particular exercise, I am more than happy to do it. I simply appeal to some businesses to help us, so that
	in future, we can honour our local volunteers—the heroes and heroines in our constituencies. I hope we can organise something by the autumn.
	The hon. Members for Ealing North (Stephen Pound) and for Colchester (Bob Russell) and I are officers of the all-party scout group. On 7 June, Mr Speaker hosted an event and the Deputy Speakers assisted with the presentations and the photographic opportunities afterwards, so I realise that you, Madam Deputy Speaker, have already heard what I am about to say. Four hundred thousand young people are scouts and they rely on 100,000 volunteers.
	The scouting organisation is absolutely wonderful. Scouts are less likely to drink or smoke. They are more likely to participate in physical activities and they normally make a great success of their lives. Fifty-six per cent. of youth members volunteer for another charity. The number of adult volunteers in scouting is more than the combined work forces of the British Broadcasting Corporation and McDonald’s. If we paid them for their work, it would cost us about £500 million. They do a splendid job.
	At the reception on 7 June, there was a suggestion, which I pass to my hon. Friend the Minister, that the Government consider brokering some form of volunteer incentive card that would entitle its holders to offers donated by businesses. One scout, Stefan Prest, mentioned the success of Orange’s RockCorps as an example of good practice.
	This evening, I attended a charity event at Spencer House, which was a fantastic occasion sponsored by the Chinese company Huawei, in conjunction with the National Society for the Prevention of Cruelty to Children, to organise the relaunch of Childline. They appealed for the ambitious number of 5,000 volunteers. The appeal is backed by the Rothschilds and the Spencer family and I hope we will do whatever we can to assist in gathering the 5,000 volunteers.
	How many events do we go to where the St John Ambulance is in attendance? Many people think the staff are paid. In Essex, Lord Petre is the president of St John Ambulance. Its members do a fantastic job. They administered first aid to 800,000 people last year and they can be the difference between a life lost and a life saved. There are 23,000 adult members and nearly 20,000 young members. The organisation trains 575,000 people a year and it has more than 1,000 ambulances and support vehicles.
	A few years ago, through the Industry and Parliament Trust, I undertook a volunteer attachment with the WRVS. It coincided with the Queen Mother’s centenary. The WRVS does a wonderful job. It runs trolley services at Southend hospital and Southend meals on wheels. It has an emergency service and there are 45,000 volunteers.

Jim Shannon: The hon. Gentleman has not yet mentioned Church youth organisations, where many people volunteer. Does he feel that they need recognition and should also be considered for honours?

David Amess: The hon. Gentleman is a wonderful attender and supporter on these occasions. He is right to remind me of that group. The only Church organisation I shall have time to mention is the Salvation Army, but I endorse everything he said.
	With 16 other parliamentarians, I was recently made a national parliamentary patron of the YMCA, although we failed the audition for Village People. It does a fantastic job with housing and homelessness, promotes sport, health, exercise and fitness, works to combat crime, helps with safety, provides education and skills, offers advice on money, tries to get young people jobs and helps with citizenship, personal development, parenting and family difficulties. The YMCA reaches out to more than 1 million people each year, working with them at every stage of their lives and offering support when and where they need it most. The movement has grown to become one of the biggest Christian charities in the world, working in over 120 countries, with 30 million members worldwide.
	The Salvation Army is a wonderful organisation. I happen to be a Catholic but I always say that the Salvation Army does a wonderful job. It certainly does in Leigh-on- Sea. It was founded in the east end of London, where I come from, in 1865. It has 50,000 members, 4,000 employees and 1,500 Salvation Army officers. It serves 3 million meals a year, carries out prison visits, helps 3,500 homeless people and runs 709 local church and community centres. It runs 636 centres for the elderly, 300 youth clubs and 120 drop-in centres. The list goes on and on. If ever we feel gloomy at Christmas, we go to the Salvation Army and it cheers us all up.
	When Dame Cicely Saunders set up the hospice movement, did she ever realise what wonderful work hospices would do in the United Kingdom? All hon. Members have hospices in their constituencies. I have Fair Havens, which was founded in 1983. It employs an army of volunteers. Supporting families who have lost loved ones is very draining.

Angus MacNeil: May I mention VSO—Voluntary Service Overseas? I was told tonight that the average age of VSO volunteers is 44, although many are young people. Those who are past their careers and are grandparents have an awful lot to give. Volunteers go overseas and give in a targeted and intelligent way, capacity building in other societies, and they deserve special mention for the work that they do.

David Amess: I entirely agree. Believe it or not, VSO is on my list, but I will now shorten my comments on it.
	When I was Member of Parliament for the area where St Luke’s hospice is situated, one of the miracles that happened there was that we built the hospice from nothing at all. Princess Diana came and opened it and it still does wonderful work.
	This weekend in all our constituencies was armed forces weekend. I am president of our local branch of the Royal British Legion, as are other hon. Members in their areas. The Royal British Legion does a fantastic job. It was founded in 1921. We had the armed forces parade to Parliament today, and I know that the hon. Member for Colchester has a great deal to do with the Anglian Regiment. We salute the armed forces and thank them for their work.
	On VSO, I declare an interest. Last year, VSO paid for me to do voluntary work in the Philippines. I was there as an advocate for Filipino nurses. One of my
	children, Sarah, has just come back from doing voluntary work in the Maldives as a teacher. It sounds glamorous, but when there are cockroaches coming into the rooms and all sorts of other things happening, it is quite a difficult job in a Muslim country. I agree that the work of VSO is first class. If any hon. Members have some free time this summer, I hope they will contact VSO and join it.

Angus MacNeil: I echo the hon. Gentleman’s sentiments about VSO wholeheartedly. I had the privilege and the enrichment of a VSO placement in Cambodia in 2008. I hope more Members take up his suggestion and give time to VSO.

David Amess: It was a wonderful experience for me. We went to Ifugao and we were stationed in Manila. For three days nurses were queuing up to get their qualifications—it is very tough to get jobs there. When one comes back to the UK, one realises how jolly lucky we are.
	At the weekend we had a Southend community in harmony event.

Ian Paisley Jnr: Many of the voluntary groups that the hon. Gentleman has mentioned, and indeed many such groups in my constituency, make a major contribution to economic well-being as well as social well-being. For example, in North Antrim we have the North West 200, which is the Coleraine and district motorcycle voluntary group, which we share with the adjoining East Londonderry constituency. It generates £6 million a year for the local economy. If that was not there, our economy would not be as strong as it is. He is absolutely right that those groups need more than a pat on the back; they need to be commended, encouraged, supported and endorsed.

David Amess: The hon. Gentleman is absolutely right. It is not a case of take, take, take, but of give, give, give, and they really do help business and other activities. I could not agree more. The Southend in harmony event was attended by Jewish people, Muslims and a whole range of other people, and it included an older people’s assembly and an army of volunteers, each and every one of whom I salute.
	I end with these thoughts for my hon. Friend the Minister. I ask the Government to do all they possibly can to help youth organisations such as the scouts to attract more volunteers. The national citizen service, which will begin in just a few weeks, offers an ideal opportunity. If those young people who complete the eight-week national citizen service schemes are then signposted to organisations like the scouts to continue their community involvement and enhance their skills as young leaders, everybody would benefit. That would ensure that the NCS is not simply an eight-week long experience, but an excellent start to a young person’s volunteering journey, which can be enhanced by the range of opportunities that scouting and other youth organisations offer.
	Another way that the Government can support organisations such as the scouts is through their considerable influence with business and employers. More than 80% of employees, when questioned, said that they would like to get involved in a staff volunteer scheme if
	their employer allowed it. The Government should consider whether a person who devotes time to volunteering should be entitled to a small amount of time off to fulfil their obligations, similar to that which is afforded to councillors and magistrates.
	This is the toughest time, certainly in my lifetime, for young people to get a job, despite their wonderful qualifications. Having worked in recruitment for many years before becoming an MP, I know that it is far better for young people to do some volunteering, rather than have a blank space on their CV, as that will go a long way in assisting them to get a permanent job.
	I ask the Government to consider where they stand on the right to take time off to train. Many organisations offer first-class training schemes for volunteers and support them to improve their performance both as volunteers and in their professional careers. In a survey, the Scout Association found that 93% of volunteers believed that the skills, training and experienced gained through scouting had been relevant to their working and personal lives. Businesses should be encouraged to see the benefits they gain from their employees’ volunteering interests and to enable them to take a reasonable amount of time off to train, safe in the knowledge that the skills they will acquire will benefit the business in the longer term.
	Let the House unite in thanking all our volunteers in our constituencies for the wonderful work they do, and let the Government support us in encouraging a new generation of volunteering.

Nick Hurd: I start by offering my utterly genuine congratulations to my hon. Friend the Member for Southend West (Mr Amess) not only on securing the debate but on the passionate way he used it to celebrate people who give time to help others in our communities, because their contribution is absolutely enormous. It is right that we celebrate them and take the opportunity to ask what more we can do to encourage, support and value them.
	My hon. Friend knows that this question is central to our vision of a society in which people feel more power and responsibility not only for their own lives but for the communities they live in and the services they use. It is the big society vision. Of course, we are not inventing something. As his powerful speech and the contributions of other Members made clear, there is already a huge range of amazing voluntary work being undertaken by individuals and groups across the country.
	My hon. Friend referred to several organisations very worthy of mention and celebration in this place, including the scout movement and its work to engage and develop young people in communities, to which my hon. Friend has contributed throughout his chairmanship of the all-party scout group. It is genuinely impressive to see how the movement goes from strength to strength with the essential support of its volunteers.
	We cannot be complacent or take the movement for granted, however. Statistics demonstrate that giving has flatlined and shows some worrying signs of decline. In all our constituencies, we wonder how we will replace the people who have taken a lead in our communities, but the Government are ambitious and we do not accept that decline is inevitable. We want to work with
	the voluntary community sector and, critically, with business, as my hon. Friend mentioned, to connect more people with the opportunity to make a difference.
	I will set out some of our initial plans, which I hope will give my hon. Friend some reassurance that the Government are ambitious and extremely committed to the agenda, and perhaps address some of his specific issues.
	Last month we published a giving White Paper, which sets out our stall. We want to focus on three things: making it easier to give; making it more compelling to give; and giving better support to the charities and voluntary groups that channel our generosity. That involves public investment, so we have said that we will invest more than £40 million in volunteering and social action over the next two years.
	That investment will include a new social action fund to support some of the most creative and effective schemes that are being developed to inspire more giving in priority areas and to inspire groups, including young people. My hon. Friend suggested new incentives to get more people involved, and he may be interested to know that that includes piloting such initiatives as Spice “time credits”, which introduce new incentives for people to give time, including discounts and preferential access to local services. We are piloting, because new incentives may be required just to tip new people over the edge and into giving time.
	We are also announcing challenge prizes to reward the best solutions for breaking down the barriers that get in the way of more giving, and we have announced a local infrastructure fund to help the amazingly valuable and important infrastructure that is out there to support community organisations and volunteering, and to help it become more efficient and more effective. Further details of how organisations can apply to those funds will be announced over the coming months.
	I am delighted to say that the White Paper has received significant support from key figures in the voluntary and community sector. Sir Stuart Etherington, the chief executive of the National Council for Voluntary Organisations, says:
	“This Paper draws together a wealth of intelligence on what can be done to stimulate greater levels of giving…in the UK.”
	The chief executive of Volunteering England says:
	“The White Paper deserves to be warmly welcomed by the…movement. It promises to make a positive advance in how people volunteer in our society and in how organisations support them.”
	My hon. Friend mentioned the national citizen service, which is a hugely important initiative. It was launched this year, with more than 10,000 places available for 16-year-olds this summer, and is a fantastic opportunity to connect young people with their own power to make a contribution to their communities. Of course my hon. Friend is right: once we have lit the spark in those young people, as we hope to, we must ensure that it is the start of a journey into other opportunities to develop skills and experiences and to make a positive contribution. So, yes, we do want to work with our providers to signpost those opportunities, and I have personally delivered that message to the scouts and to Youth United, because they are entirely complementary to the national citizen service.
	It is not just young people we want to inspire, however. We believe that throughout communities in Britain there are people who would get more involved in changing things in their neighbourhood if they were encouraged and supported to come together. That is especially true of relatively disadvantaged neighbourhoods where there is less obvious so-called social capital, and that is why we are investing in training 5,000 community organisers, who will bring people together in their areas and encourage and support them to make the differences they want to see in their communities. That is why we are also launching a new neighbourhood grants fund, Community First, which will incentivise local people to work together to create the change they want to see.
	As my hon. Friend says, we should look to cut some of the red tape that gets in the way, while making sure that we continue to protect the vulnerable. That is why I asked Lord Hodgson to lead a joint Cabinet Office and Department for Business, Innovation and Skills red tape taskforce. Part of the role of that taskforce was to look at how to remove barriers to those wishing to become more actively involved. He recently published his report “Unshackling Good Neighbours”, and we are reviewing the recommendations that relate to addressing barriers to the giving of time. I heartily recommend the report to my hon. Friend, because I think he will appreciate that it oozes common sense from every page. It is a thoroughly good read. As I said, we are reviewing the recommendations and seeing what we can action as quickly as possible.
	My hon. Friend mentioned CRB checks. He will be aware that we have completed reviews of the criminal records and vetting and barring regimes. As outlined in our programme for government, the aim of the reviews was to scale back these regimes to common-sense levels. It is clear from my conversations with the sector and across communities that there is still frustration about how the CRB process works in relation to the time it takes and the restrictions on portability around the system. The main recommendations of the reviews, which are being taken forward under the Protection of Freedoms Bill currently going through Parliament, are to reduce the coverage of the schemes to individuals who have close and regular contact with vulnerable groups; to place a greater onus on employers and voluntary organisations to decide when to carry out checks and to make it easier to carry them around the system; and to introduce continually updated CRB checks to reduce the need for employees and volunteers to have new checks when they move positions.
	In addition, we announced in the Budget—this is all in the context of trying to make it easier to volunteer—that all drivers who use their vehicle for work or volunteering will now be able to claim 45p per mile for the first 10,000 miles, an increase of 5p per mile. I am sure that my hon. Friend will know that there was frustration
	across constituencies about the rising cost of giving time in this regard, and we think that this will help. The Department for Work and Pensions and Jobcentre Plus have been working with the Cabinet Office and key representatives of the voluntary sector to tackle the real and perceived barriers to unemployed people volunteering.
	We are very conscious of the need to lead by example. That is why we are encouraging civil servants to volunteer by turning the civil service into what we call a civic service. They will spend more time out of Departments and in communities working with organisations, and we believe that we will get better civil servants as a result. We are taking a lead in encouraging civil servants to do at least one day of volunteering each year using special leave. We hope that this sets a good example to other employers. One of the reasons I am so optimistic about this agenda is that increasingly businesses are recognising that it is in their commercial interests to encourage their human resources to give time and stretch themselves in different contexts. It is not just about PR value or community value but about developing their most important assets, which are human. We want to lead by example with the civil service, and we are very much encouraging business to follow.
	I recommend to my hon. Friend an excellent speech made by the Prime Minister—of course, every speech that he makes is excellent, but this one is particularly good—called “Every Business Commits”, which speaks very strongly to businesses about what we expect as regards encouraging more social responsibility.
	My final point concerns a matter on which my hon. Friend placed a lot of importance. In addition to implementing these programmes, it is essential that we recognise and reward inspirational examples of good practice in volunteering and social action. To achieve this, the Government have created the big society awards. I do not know if he is aware of that, but I can write to update him on how every single Member of Parliament can nominate individuals and organisations in their constituencies for these awards. We also continue to support and promote the Queen’s award for voluntary service. I was delighted to hear about his own personal initiative on celebrating local heroes, and I wish him every success with that.
	I would again like to thank my hon. Friend for calling this debate this evening. As I highlighted, there is already a lot of excellent voluntary work taking place across the country. In the years to come, we hope to grow volunteering and social action and enable the existing good practice to become the norm. I hope that I have reassured him that the Government are extremely ambitious about and very committed to encouraging more people to get involved in their communities.
	Question put and agreed to.
	House adjourned.